The Institute of Chartered Accountants in Australia has warned that ASIC’s proposed disclosure requirements for SMSF advice may be “too narrowly focused in the wrong area”.
In releasing its submissions on ASIC’s Consultation Paper CP 216, the Institute believes that the greater risk of awareness for potential SMSF trustees lies not with the provision of advice from licensed professionals but with those receiving advice from unregulated sources. The Institute notes that advice is not a requirement for those considering an SMSF. As such, the Institute recommends that ASIC should focus on an educational approach for all potential SMSF trustees rather than a compliance approach for advisers.
Furthermore, the Institute questioned whether the specific disclosures proposed by ASIC are warranted given that advisers are subject to the FoFA best interests duty.
The Institute also made specific comments on:
- compensation warnings – about a lack of statutory compensation for SMSFs and broader disclosures about the operation of statutory compensation schemes;
- disclosures requirements – responsibilities and risks for SMSF trustees running an SMSF; investment strategy requirements; time commitment and skills; costs; exit strategy; legislative change; transitional period;
- SMSF running costs – the Institute believes that information on the costs of setting up and operating an SMSF should not be a mandatory disclosure for advisers, but rather made available to potential SMSF trustees by the regulators (ASIC and ATO). While indicators of costs are useful, the Institute said the costs for an individual SMSF can vary considerably and advisers will tailor disclosures about costs to their individual clients according to the best interests duty.
[LTN 231, 28/11/13]