SMSF industry receiving ‘mixed messages’ on quality of advice
Some of the reviews into SMSF advice released this year have given the industry conflicting messages about the state of compliance with advice services, according to a technical expert.
Thomson Reuters senior tax writer Stuart Jones said ASIC released two key reviews into SMSF advice this year: one focused on the unlicensed accountants and the establishment of SMSFs, and another looked at personal advice given to SMSFs more generally.
The first review found “no systemic concerns” around the provision of unlicensed SMSF advice, with the only issues relating to outdated information on websites and in the promotional material of accountants reviewed.
The findings of the second review, however, indicated that 91 per cent of files reviewed the adviser did not comply with Corporations Act’s best interests duty and related obligations.
Mr Jones noted that while the review highlighted that 91 per cent of the advice files had defects, only in 10 per cent of the files reviewed was the client likely to be significantly worse off due to the advice.
“Even though there was that headline figure of 91 per cent, the report indicated that a lot of that advice wasn’t necessarily financially detrimental to the client so we've got a few mixed messages around that,” he said.
“I think like any industry, you’re always going to have elements of people who are going to become involved in unscrupulous practices and the key to that is still education and financial literacy with some of those issues.”
Mr Jones also said that ASIC would be under greater pressure to target some of the one-stop shop operators following the revelations from the Royal Commission around SMSF loans and property.
“They've always been in that space, it’s just that its’ a very difficult area for them to keep one step ahead of some of the promoters,” he said.
“I think they'll now be a little bit better resourced to do something about it but we've also had some of those conflicting messages in that space."