ASIC steps up early super crackdown

The Australian Securities and Investments Commission (ASIC) has reaffirmed its ongoing crusade against schemes illegally promoting the early release of superannuation by announcing a nationwide campaign with the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA).

The crackdown follows a joint announcement by ASIC and the ATO in February warning consumers to be wary of schemes falsely promoting the withdrawal of super or the use of a self-managed fund to pay off all their debts, meeting everyday expenses or for purchases such as a family home.

“We are concerned that people’s hard-earned retirement savings could end up in the pockets of these promoters’, ASIC financial services regulation executive director Ian Johnston says.

ASIC alleges illegal early release schemes often involve substantial payments to the scheme promoter to gain access to superannuation savings.

“ASIC is determined to stamp out these illegal schemes and has formulated a three-pronged approach, involving enforcement, compliance action and education to protect consumers and improve standards in this area,” Johnston says.

ASIC claims to have tested over 50 companies and individuals over the past two months on compliance issues, with some visits raising some serious concerns.

These concerns include misleading conduct or statements inducing people to dispose of their existing superannuation interests and establish a self-managed superannuation fund (SMSF), and firms offering financial advice and financial products without holding a valid financial services licence.

“Promoters will often market SMSFs by saying that superannuation is ‘your money’ which can be transferred into ‘your bank account’. This may mislead people about their obligations as a trustee of a SMSF,” Johnston says.

Over the past four years ASIC has instigated 29 civil and eight criminal enforcement actions against promoters of illegal early access to superannuation schemes.