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ASIC bans adviser over SMSF property, loans advice
A Gold Coast adviser has received a five-year ban from providing financial services after surveillance conducted by ASIC found he had failed to act in the best interests of clients when advising them on to set up SMSFs to purchase property.
In a public statement, ASIC said it has banned Gold Coast adviser Daniel John Renneberg from providing financial services for five years after a surveillance found that he had failed to act in the best interests of his clients.
ASIC said it reviewed the advice Mr Renneberg had provided to 15 of his clients while he was an authorised representative of Austplan Pty Ltd.
On reviewing the files, ASIC found that Mr Renneberg received referrals from GM Homes Australia Pty Ltd (GM Homes) to help their clients establish SMSFs to purchase an investment property.
“ASIC found that Mr Renneberg had not provided the clients appropriate financial advice or acted in their best interests. He had advised some clients to set up SMSFs with limited recourse loan arrangements that were completely unsuitable and placed his clients in a vulnerable financial position,” the corporate regulator stated.
“Mr Renneberg completely failed to consider his clients’ needs, objectives and circumstances. Mr Renneberg also failed to give his clients statements of advice that set out the advice he provided and the information on which he based his advice.”
ASIC commissioner Danielle Press said that SMSFs are not for everyone, and using an SMSF to borrow money and buy a property is a high-risk strategy.
“ASIC will be looking very carefully at advisers who recommend this strategy and taking swift action where we see problems,” Ms Press said.
“Financial advisers must not rely solely on client direction when establishing an SMSF. They must adequately demonstrate why an SMSF is appropriate and why it is in their clients’ best interests.”
Ms Press said that ASIC expects financial advisers to use their skills, expertise and judgement in determining whether an SMSF is indeed appropriate for their clients’ personal circumstances and needs.
“An SMSF comes with a lot of responsibility and involves significant time and effort and may be suitable if consumers have extensive knowledge of financial and legal matters. They also need to consider their legal responsibilities and the tax implications when deciding to establish an SMSF,” she said.
ASIC cancelled Austplan’s Australian financial services licence in November last year, following concerns it had about deficiencies in the financial services provided by a number of its representatives.
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.
While the 'adviser' in the article appears to be a dolt and not doing his job well in any facet, I also have grave concerns that ASIC are essentially aligned with industry funds, and industry funds have publicly stated that they intend to first finish off financial planners, and then target SMSF's for destruction. Chilling words, especially from a self-interest group that appears to have the regulator in their pocket (ASIC recently appointed an industry fund as their employees fund, despite most already having a sound federal government super fund; go figure).
As professionals, it is literally in our own self preservation interests to put pressure on ScoMo, Tim Wilson and others in power to end this corrupt nexus of unions inside super funds. There is no place for them and they should never have been allowed everyone's wealth, except for brilliant political maneuvering by Keating back in the 80's. Time for change.0- Back to being an accountant0
- In ASICs opinion....
If the client has credit card debt, they don't have the financial literacy to be an SMSF member.
True story, what a joke.0 - "...using an SMSF to borrow money and buy a property is a high-risk strategy."
How is it any riskier than doing it in your own name, or in another vehicle outside of SMSF; or using your SMSF to invest in a managed fund which borrows to buy property; or leveraging a share portfolio in SMSF?
Every strategy has risks associated with it, but ASIC's narrow world view seems to be that these are exponentially magnified just because a SMSF is involved. Baffling.0 - 1. ASIC, ie regulation can only ever impede and stupefy a free market. They are not anyone's friend, neither consumer or adviser, apart from their political masters. ASICophiles and sycophants please stand in line.
2. Therefore, the continuing 'war' in property spruikers v authorised advisers is marginal at best (as this example again lays bare) and nothing more than a distraction, welcomed by regulators, as the potential for skewed, self-serving advice is no less in either environment.
So, if the majority of otherwise well meaning advisers were genuine in their desire to protect clients from dodgy property 'advice' they'd be driven to form a proactive relationship with a truly client-focused/ advice-based property advisory service that shares their values and aligns with their advice process. Sadly, most don't and simply find it satisfying to throw brick bats from the sidelines. As a result, they, being the passive majority are the problem, not the few rogues who get, and yes deserve, their comeuppance.0 - We need further & better particulars to understand the facts issues to understand the ASIC decision in the said & future cases.0
- I understand the above and agree fully with your assertions and accept them as facts. That being said ASIC seems to be so against SMSF and seem to be bullying people into industry funds. It makes me wonder whether ASIC is really working for. By the way i am not a financial adviser. I am just someone who has my own SMSF.0
- I imagine that the non-existent SOA(s) was also a factor here!0
- It's not that, as an adviser, his job was to make sure that by setting up an SMSF, it is in their best interest and that it would also put them in a better position. By not ascertaining their financial position and literacy, the adviser may put them in a situation where the SMSF is not appropriate.
The adviser is not there to follow orders of the client. He should have made sure before proceeding with the advice (in this case, no advice as no SOA's were delivered) that the client would be benefited in future. There may not have been a discussion of goals nor projections that this was a good idea. If he felt that the clients had very little understanding of their duties as trustee of their superfund, his recommendation would be not to set one up or walk away from providing any advice.0 - Really ASIC. So if a person insists they would like a property in their own fund, they are indirectly being coerced by ASIC to look at share or other investment options. Also ASIC states an SMSF is not for everyone. Last time I looked Australia was a free democratic country. Where was ASIC prior tho the GFC advising advisers to direct their clients away from the share market, of course they were no where to be seen. It seems ASIC is really the government sponsored hammer behind the industry funds who want SMSF's gone.0
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