ASIC tipped to widen SMSF surveillance net
In the wake of the royal commission, lawyers and consultants are advising the corporate regulator will likely further investigate whether clients were suitably recommended an SMSF.
In the current regulatory climate, law firm The Fold Legal believes ASIC enforcement action is as likely as “night follows day” where breaches that have not been voluntarily reported are found out.
For SMSF practitioners, inappropriately recommending SMSFs is likely to be captured in a broadened ASIC net, according to the firm’s managing director, Claire Wivell Plater.
“It’s not just low balances that ASIC is concerned about – client financial literacy and willingness to manage the responsibilities inherent in an SMSF are just as important,” Ms Wivell Plater said.
Westpac came under fire during the royal commission for inappropriately setting up an SMSF for one client, who was left emotionally and financially devastated following poor advice.
However, Ms Wivell Plater believes small firms – which are an easier target – are next on the corporate regulator’s radar.
“Although recent ASIC enforcement action and the royal commission have predominantly focused on the major banks and AMP, it would be foolhardy to assume that non-bank advice firms are not a focus. Patterns emerging teach us that [they] are the next focus,” Ms Wivell Plater said.
Smaller firms are receiving out-of-the-ordinary requests for information from ASIC, according to Licensing for Accountants chief executive Kath Bowler.
These firms, which are typically well-meaning and provide quality advice, are concerned that minor compliance slips could compromise their reputations.
“If you look under the hood of any business, there’s always going to be something they could have done better, and that’s not to say that they’re not a good business,” Ms Bowler told SMSF Adviser.
“They don’t want to get caught up in having their names tarnished just because ASIC needs to go and find fault. That’s really not getting to the heart of the issue,” she added.
