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SMSF insurance failures a litigation risk, advisers warned

SMSF insurance failures a litigation risk, advisers warned

Miranda Brownlee
07 January 2016 — 1 minute read

A lack of consideration given by SMSF practitioners in regards to their client’s insurance arrangements could result in legal action in future years, an industry consultant has cautioned.

Speaking to SMSF Adviser, Mayflower Consulting director Sarah Penn said one of her major concerns within the SMSF industry is practitioners advising their clients to pull their money out of their existing super fund product when they establish their SMSF without considering insurance first.

“I’ve heard of numerous instances where the retail super fund has been closed and all the money has been put into self-managed super, and the person has been left with either no insurance or they’re absolutely paying through the nose for the insurance they can get,” said Ms Penn.

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“It makes me very concerned and I think it’s the sort of area where potential litigation issues are going to come, further down the track, for accountants.”

Ms Penn said that once clients reach the age of 50, the chance of them or someone very close to them having a major health incident is very high.

“And that’s right when people get into SMSFs and drop their insurance,” she said.

“Self-managed super for any one individual is only part of the picture and it’s so important that whoever is giving them advice, whether they’re an accountant or an adviser, is making sure they’re covered if something happens.”

Read more: 

Gadens warns on lasting impact of disqualification

FOS highlights common SMSF dispute areas

LRBA legislation ‘lacking guidance’, says consultant

SMSF insurance failures a litigation risk, advisers warned
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