During the Senate inquiry into capital gains tax and negative gearing reforms, concerns were raised that the carve-out of superannuation funds from the proposed changes could encourage greater investment in property through SMSFs, potentially exposing investors to property spruikers and high-pressure sales tactics.
Peter Burgess, CEO of the SMSFA, said the Association strongly supports reforms to clamp down on high-pressure lead generation activity and close regulatory gaps that allow consumers to be funnelled into unsuitable financial arrangements.
“This unscrupulous behaviour has no place in our financial services ecosystem and needs to be the clear focus of reform,” he said.
“However, it’s important to recognise and to call out that the SMSF structure is not the issue here. It’s the conflicted, inappropriate, and often unlicensed advice that’s provided to the SMSF trustees that is the ultimate cause of consumer harm.”
Burgess continued that treating SMSFs as the problem mischaracterises the issue and risks directing reform away from the conduct that causes the harm and can lead to wrong conclusions and wrong solutions.
“Imposing new standards or investment restrictions on SMSFs in response to these concerns could have broader consequences,” he said.
“There is a real risk that blunt policy responses introduce permanent constraints on trustee choice, without improving consumer outcomes. Targeting the wrong lever rarely delivers the right result.”
He continued that the focus should be on those who exploit consumers through aggressive marketing, lead generation schemes, and poor advice practices.
In its recent submission to Treasury, the Association called for stronger measures to restrict unsolicited lead generation and consumer steering practices.
The Association also proposed several new measures to strengthen licensing, oversight and accountability across the advice and property promotion sectors and enhance enforcement against unlicensed operators and those facilitating consumer harm.
“If policymakers are concerned about an increased risk of property spruiking activity, then the solution needs to target this conduct directly, not to limit the structures Australians use to manage their retirement savings,” Burgess said.
