The Institute of Chartered Accountants Australia has urged the Australian Securities and Investment Commission not to make unnecessary changes to self-managed superannuation rules and will form a team to determine the practical implications of the regulator’s latest consultation paper on its 61,000 members.
In her speech to the Institute of Chartered Accountants’ National SMSF Conference in Melbourne early this week, ICAA head of superannuation Liz Westover said further changes should only occur “following considered discussion with a long-term outlook, based on real and substantiated evidence”.
“The Institute supports mechanisms to ensure that potential SMSF trustees have access to and actually receive the right information to be able to properly assess whether an SMSF is appropriate for them,” she said.
“It is also important to ensure that over-regulation doesn’t make the process of obtaining advice too costly for trustees.”
Westover’s comments come as the regulator is preparing to modify the law, by way of class order, to impose specific disclosure requirements on Australian Financial Services licensees and their authorised representatives.
Proposed changes, contained in ASIC’s Consultation Paper 216 Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs, include requirements for financial advisers to outline the costs of establishing, running and winding up SMSFs; estimate the time and skills required to manage SMSFs; analyse the likely impact of competition and future policy changes to SMSFs; and warn clients that compensation arrangements in the Superannuation Industry (Supervision) Act 1993 do not apply to SMSFs.
Greg Tanzer, ASIC commissioner, defended the regulator’s current plans.
He told the conference’s 380 delegates that recent surveillance had uncovered “concerning pockets of poor advice” such as recommendations to set up an SMSF to gear into direct property.
By combing through files from financial planners and accountants, the regulator found there was “room for significant improvement” with some of the most common problems being that advice was not sufficiently tailored, replacement product disclosure was absent or inadequate, insurance recommendations were absent or inadequate, an inappropriate single asset class was provided to investors, suitable alternatives to an SMSF were not considered and inadequate consideration was given to the investor’s long-term retirement plan, he said.
Tanzer also revealed that ASIC had issued only two limited AFSLs to accountants in the last three months, from 19 applications.
Furthermore, since becoming the registration body for approved SMSF auditors in January 2013, ASIC has received 7346 applications and approved 7035 SMSF auditors. The regulator has also received approximately 330 competency exam bookings and delivered about 120 SMSF auditor exams in 21 of 44 exam venues. It anticipates that over 1800 exams will need to be delivered by January 31, 2014.
