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SMSF accountant in hot water, enters EU with ASIC
ASIC has accepted a court enforceable undertaking from an accountant following an ASIC investigation that found she had received referrals in relation to establishing SMSFs from Park Trent Properties Group.
In a public statement, ASIC said that it has accepted a court enforceable undertaking from Gold Coast-based accountant Jenan Oslem Thorne, of Saber Superannuation Pty Ltd, after it found she had failed to act in the best interests of her clients and had prioritised her own interests above theirs.
The undertaking prevents Mrs Thorne, also known as Cenan Thorne or Cenan Dikmen, from providing financial services for a period of three years effective from 13 February 2019.
ASIC said that it decided to review Mrs Thorne’s advice when it discovered, during its investigation into Park Trent Properties Group Pty Ltd, that she was receiving referrals in relation to establishing SMSFs from Park Trent.
ASIC reviewed advice provided by Mrs Thorne when she was a representative of SMSF Advice Pty Ltd, a wholly owned subsidiary of AMP Limited, and concluded that she had advised some of her clients to establish SMSFs without taking their circumstances into account.
Ms Thorne was also an authorised representative of the SMSF Advisers Network, operated by National Tax and Accountants' Association Limited, up until 21 January this year.
ASIC found that Mrs Thorne hadn’t properly considered her clients’ existing superannuation arrangements or explored why they were interested in investing in direct residential property through an SMSF. When recommending SMSFs to some of her clients, ASIC also said that she had inappropriately scoped advice by excluding insurance and retirement planning.
ASIC also found that Mrs Thorne did not adequately stress-test SMSF strategies and had recommended SMSFs to some of her clients despite inadequate evidence to suggest that the strategies would provide increased retirement benefits.
Furthermore, Mrs Thorne had recommended that her accountancy practice, Saber Accountants Pty Ltd, prepare the annual accounts and tax returns for the SMSF clients. This led ASIC to determine that Mrs Thorne recommended the services of a related party to create extra revenue for herself.
As part of the EU, Mrs Thorne has agreed to inform all of her former personal advice clients about the EU and provide contact details of her former licensee, SMSF Advice Pty Ltd. Former clients of Mrs Thorne who have enquiries or complaints regarding her advice or conduct should contact SMSF Advice Pty Ltd.
AMP recently confirmed that it is in the process of winding up its SMSF Advice licence after the last few advisers on the licence transferred to other dealer groups.
ASIC said that it expects financial advisers to comply with their best interests duty and pay particular attention to how they scope their advice to clients.
“Prior to recommending SMSFs, advisers should critically probe why a client wants to set up an SMSF and what they hope to achieve. Advisers should also give adequate consideration to risk management and succession planning before setting up an SMSF for a client,” the corporate regulator said.
ASIC commissioner Danielle Press said that financial advisers have a legal obligation to provide advice that is in the best interests of their clients, not prioritise their own interests or simply implement client instructions.
“ASIC will continue to take action when advisers or AFS licensees don’t comply with the law,” she said.
“Consumers need to know that managing your own super is a major commitment that can be expensive and involve significant time and effort. SMSFs are not for everyone. Consumers should consider their personal circumstances carefully before deciding to establish an SMSF.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
Let's be honest - accountants set up SMSFs because they generate accounting fees.
Which is basically a trail commission.
It's a clear conflict of interest, especially when industry funds are much cheaper for most people.
Accountants need to manage that EXTREMELY carefully.0- Lets be honest there are many very valid reason for setting up SMSF.
And Industry Funds are not cheaper at all when comparing all fees, Admin, MERs, on decent $$ account balances.
Without even looking at Rip off Life Insurance with crap terms, etc
Agreed accountants need to be careful and should always be but your comments stink of a Labor / Union / ISA stooge, is this Chris Bowen, Bill Shorten or Ian Silk ?0
- It seems to me that the whole "SMSF" aspect of these (numerous) cases is a smokescreen. The real issue is that people have been conned by dodgy advisors into buying bad investments.
A bad investment is a bad investment, regardless where it sits, yet ASIC continually focus on the fact that it has been acquired via an SMSF. Perhaps they need to get ahead of the game and put a rocket through all the property spruiking firms making a killing on swamp land and empty rental properties.0 - Sitting at the desk beside me is a colleague who was employed by Sabre Accountants. One of this person's responsibilities at Sabre was to send the new SMSF client's a Statement of Advice for signing. This was routinely done MONTHS after the SMSF had been set up. In fact, when this person came to work for us, they were really surprised to learn that Statements of Advice needed to be sent to clients (and agreed by them) before the advice was implemented. So, from my persepective, I am glad that ASIC have finally caught up with that business.0
- Accountants are the tip of the iceberg.
ASICs review to date has looked at licencees and/or their authorised representatives.
How does ASIC plan to deal with licenced administration firms that operate in the online market.
If they receive an online fund establishment is the firm required to provide an SoA?
Some administration firms require the trustees to utilise a particular bank account or broking firm and then receive a commission from those service or product providers. Does this breach the best interest provision?
Others provide a portal that trustees can acquire term deposits insurance loans etc (again receiving a commission). Is this an allowed execution only service?
The net that ASIC is casting has plenty of holes in it. Its about time that ASIC sat down with the SMSF industry participants and provided clarification so that client interests are protected and that the industry can provide a cost effective services to trustees.
0- ASICs view on execution only should be the same regardless of how the adviser interacts with the client.
If you physically see the client you are required to go through the whole advice process - fact find SoA etc
If a client visits via an online portal then the process needs to be the same albeit that there is no face to face contact.
We live in an ever changing digital world. ASIC needs to move with the times.0
- ]ASIC commissioner Danielle Press said that financial advisers have a legal obligation to provide advice that is in the best interests of their clients, not prioritise their own interests or simply implement client instructions[/i]
The whole advice piece around SMSFs and their administration is a cluster !@#%. There are different rules around different business models.
ASIC states that execution only is a problem for licenced advisers yet there are administration firms who can elect not to hold a licence and support execution only for adviser supported clients. But how do they support their non intermediated (direct) clients
There are administration firms who hold a licence so they can clip the ticket on product (presumably to create extra revenue for themselves) but then claim they do not provide advice so claim they can provide an execution only service to no intermediated clients. Not sure what ASIC thinks with this opt in / opt out situation.
I assume ASIC will provide clarification on all matters pertaining to SMSFs
0 - Limited licence for accountants do not work. What a mess - I feel for these accountants trying to service their clients. Doesn’t matter what they do you can’t comply with a regulations that are loosely worded and subject to interpretation0
- This case has noting to do with accountants limited advice licence.
Both licencees held full licences who licenced an accountant. It is encumbent on the licence holder to ensure that the authorised representative is properly trained and complies with basic advice principles.
ASIC has properly taken action against the AR. Now lets see if they take action against the licencee or is that course of action only limited to Dover.0
- Agreed, we have lost lot of money since investing SMSF, struggling to keep it up due the area does not attract rental our property. We have basically lost faith to the person who encourage us to use SMSF. How do we know if this SMSF Adviser is doing the job not for the commission ?0
- Incredibly disappointed - but not surprised - with this story.
ASIC has done the right thing.
The facts speak for themselves - disgusting, self-serving behavior. Unfortunately not isolated.
As a Gold Coast business owner in the SMSF space, it makes me furious0 - "Furthermore, Mrs Thorne had recommended that her accountancy practice, Saber Accountants Pty Ltd, prepare the annual accounts and tax returns for the SMSF clients. This led ASIC to determine that Mrs Thorne recommended the services of a related party to create extra revenue for herself."
Wow how many Accountants are guilty of this SMSF set up and then referral to themselves / related company to do the SMSF Accounts ?
That is a bloody wide net ASIC is casting if it wants to bust SMSF advice.0 - Why is the public treated like a baby playing with a gun when it comes to SMSFs?
If someone wants one, they can have one. It’s a free country. If that’s not what the Govt or the vested interests want, then have the guts to ban SMSFs all together.
This ridiculous nanny state ASIC has created cannot work. They would “like” everyone to get financial advice, but the laws fall short of compelling people.
So ASIC sets about persecuting any professional that comes within breathing distance of an SMSF. Like a petulant child, ASIC policy makers are just determined to have their way, even when the law doesn’t support them.
This country is regulating itself out of existence, protecting people who don’t need or want it.
0- You've missed the point. If someone wants a SMSF, they CAN have one, as you say, it is a free country. The problem here is that Sabre RECOMMENDED that the these people commence a SMSF, when it was clearly not in their best interest to have one.0
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