ASIC has put forward a range of policy solutions for self-managed super funds (SMSFs) to be considered by the Parliamentary Joint Committee on Corporations and Financial Services. In response to Questions on Notice following the ASIC Oversight hearing on 17 August 2018, ASIC said the following policy solutions could be considered by the Committee in terms of:
- Member education – consumers could be required to undertake SMSF trustee education prior to setting up an SMSF. At the moment, training is available, but is not compulsory.
- Financial advice – while the new training and education standards to be set by the Financial Adviser Standards and Ethics Authority (FASEA) should improve the quality of financial advice, ASIC has further suggested that it might be appropriate to require specialist training for persons providing advice to set up an SMSF.
- SMSF establishment and LRBAs – consideration could be given to prohibiting limited recourse borrowing arrangements (LRBAs) and/or mandating a minimum SMSF balance. ASIC said consideration could also be given to extending the proposed design and distribution obligations regime for financial products to the establishment of SMSFs. This could involve imposing an obligation on SMSF promotors to consider the type of consumer whose needs would be addressed by establishing the SMSF and the channel best suited to distributing the SMSF as a product class.
- Compliance/oversight – ASIC said it is continuing its focus on poor quality SMSF advice and is investigating enforcement action against a number of SMSF one-stop-shops.
[LTN 193, 8.10.18; Tax Month – October 2018]
CPD questions (answers available)
- Does ASIC recommend that SMSF specific trustee training ought be compulsory before establishing an SMSF?
- Does ASIC recommend that SMSF trustees ought undergo specialist financial advice training for persons setting up an SMSF?
- Does ASIC recommend prohibiting SMSF’s undertaking Limited Recourse borrowing or a minimum balance?
- Does ASIC say that the quality of SMSF advice is uniformly good?