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ASIC tipped to widen SMSF surveillance net
In the wake of the royal commission, lawyers and consultants are advising the corporate regulator will likely further investigate whether clients were suitably recommended an SMSF.
In the current regulatory climate, law firm The Fold Legal believes ASIC enforcement action is as likely as “night follows day” where breaches that have not been voluntarily reported are found out.
For SMSF practitioners, inappropriately recommending SMSFs is likely to be captured in a broadened ASIC net, according to the firm’s managing director, Claire Wivell Plater.
“It’s not just low balances that ASIC is concerned about – client financial literacy and willingness to manage the responsibilities inherent in an SMSF are just as important,” Ms Wivell Plater said.
Westpac came under fire during the royal commission for inappropriately setting up an SMSF for one client, who was left emotionally and financially devastated following poor advice.
However, Ms Wivell Plater believes small firms – which are an easier target – are next on the corporate regulator’s radar.
“Although recent ASIC enforcement action and the royal commission have predominantly focused on the major banks and AMP, it would be foolhardy to assume that non-bank advice firms are not a focus. Patterns emerging teach us that [they] are the next focus,” Ms Wivell Plater said.
Smaller firms are receiving out-of-the-ordinary requests for information from ASIC, according to Licensing for Accountants chief executive Kath Bowler.
These firms, which are typically well-meaning and provide quality advice, are concerned that minor compliance slips could compromise their reputations.
“If you look under the hood of any business, there’s always going to be something they could have done better, and that’s not to say that they’re not a good business,” Ms Bowler told SMSF Adviser.
“They don’t want to get caught up in having their names tarnished just because ASIC needs to go and find fault. That’s really not getting to the heart of the issue,” she added.
Law firm advises there will be legal issues, company spruiking signing up accountants for licences advises that accountants sign up. The same people are delivering the same scare campaign.
There seems to be a never-ending series of "articles" covering the same message. Be nice if you recognised that the vast majority of accountants are university educated and have completed post-graduate study, they are neither stupid nor uneducated nor negligent or they would not still be in business.0- This article is just another promo0
- Many accountants, licensed or not, give up too quickly on ensuring their client receives licensed advice. Client says "I don't want to pay for written advice", Accountant says "Oh, um, ok.... sign this execution only form then".
An execution only form does NOT mean that no advice was given. It's simply a feeble attempt to avoid the required process. It is the accountants saying "I will take a big professional risk so that you can save a bit of money by not paying for a written advice process".
Case law is that using 'execution only' forms, when influence was in fact given, do not hold up.
Frustrating as this is, and I know it's infuriating, it's a crazy risk for accountants to take on. Especially as your PI insurance policies explicitly exclude anything that constitutes financial advice. You're on your own.
And don't forget, advice isn't just saying "I recommend you do XYZ". Advice includes saying "Yes client, I think you're making a good decision" or "I wouldn't do that if I were you".
Even suggesting that someone should NOT use an SMSF is financial advice.
0 - Of course these corrupt incompetent idiots at ASIC would target SMSF rather than even contemplate investigating ISA funds (fact 1 - Kell stated during RC and was not hammered by the equally corrupt or incompetent RC commissioners), despite the ISA representing $260Billion+ of retirement savings (fact 2), and have known 'fee for no service' issues (fact 3 - first state super), have kickbacks and corruption rife (fact 4 - known multi-million dollar payments and commissions into and out of ISA funds not benefiting members at all, but claimed as 'operational expenses'), despotism (fact 5 - out of all Australia's pre-eminent superannuation and trustee specialists, Chloe Shorten was the best choice, really?), conflict of interest and vertical integration issues (fact 6), and ultra aggressive high risk asset allocations in conjunction with opaque underlying investments with no potential of gaining clarity for a professional let alone a member. Sure there are others I have missed but feeling faint over having written so many already and the giddy ineptitude or head spinning utter irresponsible corrupt disregard shown by ASIC, I need a lie down.0
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