No special disclosure for SMSF set-ups
Industry superannuation funds have suffered a setback with the Australian Securities and Investments Commission (ASIC) deciding against imposing more disclosure requirements on financial services licensees and planners giving advice around establishing a self-managed superannuation fund (SMSF).
Despite Industry Super Australia (ISA) and the Australian Institute of Superannuation Trustees (AIST) being amongst those pointing to the need for more caution around SMSF establishment, ASIC this week declared it would not "modify the law to impose specific disclosure requirements on AFS licensees and their authorised representatives who give personal advice to retail clients on establishing or switching to an SMSF".
However, ASIC has left the door open to impose specific requirements if it were to continue to see a continuation of poor advice around SMSFs.
Responding to the many submissions it received on the issue, the regulator said it had, instead, decided to issue two information sheets to provide guidance on how advisers could provide advice to clients on establishing or switching to an SMSF.
It said the information sheets provided guidance on the types of risks and costs that should be considered, discussed and disclosed by advisers giving personal advice to retail clients on establishing or switching to an SMSF.
"They also provide ‘compliance tips', which indicate the factors that ASIC is likely to look more closely at as part of our surveillance activities," the ASIC announcement said.
It said that its response had taken into account the feedback it had received from stakeholders.
"We also consider that there is now a more heightened awareness of the risks and costs associated with SMSFs. This is partly due to increased publicity about our concerns over inappropriate advice to investors who may be considering an SMSF through public statements, speeches," the ASIC announcement said.
However it concluded on the note: "We may revisit the need to impose specific disclosure obligations in relation to advice on SMSFs if we continue to see poor SMSF advice".
ASIC has also pointed to $200,000 being the "soft benchmark" for the minimum required to establish and SMSF, noting, "We consider that SMSFs with balances below this amount are less likely to be in the client's best interests".
"This benchmark does not preclude an adviser recommending that an SMSF be established below this amount; however, we are likely to look more closely at advice that recommends establishing or switching to an SMSF with a balance below the $200,000 soft benchmark."
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
