Peter Burgess, chief executive of the SMSF Association, said he is “deeply concerned” about recently reported industrial-scale schemes encouraging people to transfer their superannuation savings into SMSFs.
“The association has a long history of warning investors about the dangers of these types of schemes, which typically involve cold calling and investors being ‘sold’ an SMSF with a promise of unrealistic investment returns,” Burgess said.
“The sector needs to be on alert about the resurgence of this nefarious activity. Such practices are contrary to what our super sector stands for – a long-term investment approach using a diversified portfolio with the end goal of achieving a dignified and secure retirement.”
Burgess said that these schemes typically “encourage” people to establish an SMSF to sell an investment product often associated with promises of unrealistic returns.
He added that of concern was the self-interest driving these sales, the lack of investment diversification, concentration in high-risk or poorly performing assets, and the inappropriate selling of an SMSF to access their product.
“Following the 2019 Hayne royal commission, ‘anti-hawking’ laws were legislated in 2021 that prohibited unsolicited sales and cold calling, prompted by past experiences where these practices had led to poor consumer outcomes,” he said.
“This kind of behaviour is also counter to the legislated best interest’s duty and the financial adviser Code of Ethics – a code that goes above the duties and obligations imposed by law.”
Burgess said the code imposed certain obligations on financial advisers, including acting in accordance with applicable laws, acting in clients’ best interests and not advising where there is a conflict of interest or duty.
“In addition, all advice and recommendations must consider the broad effects arising from the advice, and must be offered in good faith, competently and must not be misleading or deceptive.”
“The upsurge in cold calling highlights the need for anyone considering setting up an SMSF to get independent, professional advice from a licensed financial adviser who is a qualified SMSF specialist.
“Deciding to set up an SMSF and take direct responsibility for your superannuation is a major financial decision that should never be taken lightly. As the Association has always maintained, SMSFs are not for everyone, so the input of an SMSF specialist before embarking on this journey is critical.”
