Sydney based financial advice boutique Omniwealth included a page on it’s website on the advantages of investing in property within a SMSF and compared the performance of a geared property investment within a SMSF to an ungeared equity investment within SMSF, ASIC said in a public statement.
“The webpage was also promoted through the social media profile of Omniwealth’s CEO with a statement that investing in property in a SMSF has taxation, leverage and diversification advantages and included a link to the Omniwealth webpage’s related article,” said ASIC.
ASIC said it was concerned the webpage did not give a balanced message about the returns, benefits and risks of investing in property in a self-managed super fund, and in particular that the uncertainty of forecasts was not made clear.
Omniwealth has since removed the statements from its website and related social media profiles and has fully cooperated in responding to ASIC’s concerns, the statement said.
ASIC deputy chair Peter Kell said making appropriate investment decisions is one of the important responsibilities of SMSF trustees.
“ASIC is determined that SMSF trustees get accurate information and are not misled by advertising, including on websites and through social media,” said Mr Kell.
As the use of social media for promoting financial products and advice services increases ASIC said it is important financial consumers are not misled or misinformed.
“ASIC encourages financial services providers using social media to regularly review their content and consider ASIC’s guidance on promoting financial products and advice services in Regulatory Guide 234 Advertising financial products and advice services including credit: Good practice guidance,” said ASIC.
Speaking to SMSF Adviser, chief executive office Matthew Kidd said the penalty came as a “massive surprise” for the Omniwealth team.
He said the firm has third-party compliance managers who had not picked up any forms of infringement and consider themselves “good corporate citizens of ASIC.”
Further, Mr Kidd said the firm wasn’t consulted before being hit with the fine.
“We put a detailed to submission to ASIC about why the fine should be reconsidered and we were knocked back. And we were disappointed because this was based on a potentially misleading claim, not actual misleading claim,” he said.
However, Mr Kidd stressed Omniwealth has been apologetic and has fully cooperated with ASIC.
couldn’t agree more KCA. I haven’t seen the example used because its been taken off the website, but knowing Aaron’s work I’m sure there would’ve sufficient info there to show what the assumptions were for people to get the gist of what was being compared.
If this gets pinged, yet the Union Funds still get to run their misleading and deceptive media campaigns, then there is no hope for a fair shake of the sauce bottle with ASIC for IFAs. But then again, they don’t charge fees so they must be ok…..
People should read full infringement notice. The model was trying to show the effect of gearing. Obviously you would contrast one asset geared one not. Perhaps Omni should have tagged it Asset A Vs Asset B than property Vs shares but over the model’s 20 yr span returns on shares and property converge. In very long run same economic forces at play. So semantics really.
They explicitly reveal all assumptions for reader to make own assessment. They explicitly show one investment geared one not. They DO state that interest rates and rents etc could change.
There are a lot of investors who will gear into property but not shares due to volatility and margin calls. So very useful comparison for them. The exact model they want to see.
Plus surely even ASIC knows you need to apply the principle of Ceteris Paribus when making a comparison. If Omni used different rates THEN it would have been misleading. Omni should get a good lawyer and appeal.
Lets just all shut the doors and go and work at ASIC.
Not only is there tenure, generous super and no risk, you get to go home at 9 mins to 5pm!
Unfortunately ASIC will have to start laying people off once they get finished decimating the financial planning industry as seems to be their intent.
I suppose they will have a bit more work left in chasing down 9,950 accounting firms, what with only 50 registered so far and less than 1 year to go to 1 July 2016.
(like that was ever going to work! haha 😉
I wish ASIC & ATO would list on the stock exchange. They are Australia’s only growth industries!
Mr Kidd, thanks for the laughter. From now on I will tell my clients that until my advice is found to be actually misleading it will only be classified as potentially misleading and any damage suffered will have to be borne by them. It will really be a “massive surprise” to them as well!!!