SPAA backs ASIC move to improve standard of advice
– But says compensation warning ‘too simplistic’
20 November 2013: The SMSF Professionals’ Association of Australia (SPAA) has outlined its stance on the disclosure of SMSF risks in its submission to ASIC on Consultation Paper CP216.
SPAA CEO Andrea Slattery says the organisation welcomes ASIC’s goal to improve the standard of advice given to prospective SMSF trustees.
“This includes disclosures on the risks associated with SMSFs; however, the requirements in the ASIC paper may not achieve those goals or be appropriate in the circumstances.
“We believe the general impetus to improve disclosure in order to reduce risks for consumers is merited and will strengthen the integrity of the SMSF sector.
“ASIC’s recommendation that advisers must provide a warning that SMSFs are not entitled to Part 23 compensation under the SIS Act is too simplistic.
“This approach ignores the complex nature of compensation for funds affected by fraud or theft. APRA-regulated funds are not guaranteed compensation under the SIS Act for fraud or theft and the fact that SMSFs do have other avenues for seeking compensation for theft or fraud has been ignored.”
In its submission, SPAA pointed ASIC
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to the uncertain nature of Part 23 compensation for APRA-regulated funds. The proposed disclosure perpetuates the “common misconception that APRA-regulated funds will definitely receive compensation if the fund is a victim of fraud or theft.
“Instead, we believe any warning that SMSFs are not entitled to Part 23 compensation should be made in the broader context of advisers discussing all compensation arrangements available to SMSFs.”
SPAA’s submission supported the other SMSF risk disclosures suggested by ASIC but warned that these risks often depended on the individual circumstances of the SMSF and their members.
The SMSF Professionals’ Association of Australia (SPAA) is the authoritative voice for the self-managed superannuation fund (SMSF) sector. SPAA, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs, is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.