Many SMSF professionals are unknowingly giving unlicensed advice on insurance by providing clients with pre-filled documentation from their accounting software, warns an SMSF auditor.
Tactical Super director Deanne Firth says a large number of accountants are generating automated investment strategies from their accounting software that contain clauses specifying that the client has considered insurance without the client deciding for themselves.
“I worry about this because they’re not licensed to give that advice and they’re printing them out from their accounting software program,” Ms Firth said.
“The trustee isn’t actually preparing the investment strategy themselves which puts the accountant at risk of the ASIC breaching licensing provisions.”
Despite the requirement for SMSF trustees to consider the insurance needs of members, Ms Firth said many trustees and practitioners are failing to adequately address the matter.
“Trustees are just signing a clause saying ‘we’ve reviewed our insurance’. I don’t see evidence of people actually taking it seriously,” she said.
“Insurance does actually need to be reviewed annually. It’s not something you set and forget, because it does change, and it does change according to your circumstances.”
The warning has surfaced at a time when the regulators are being tipped to come down hard on the insurance industry broadly, particularly following its investigation into the sale of add-on insurance.
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