ASIC to look at SMSF costs
The Australian Securities and Investments Commission has signaled it will soon be issuing a consultation paper dealing with the costs associated with self-managed superannuation funds (SMSFs).
The regulator's intentions were flagged by ASIC Commissioner Peter Kell, who said the purpose of the consultation paper would be to "explore the costs rather than to seek to mandate a minimum balance" for SMSFs.
Addressing a CPA Australia SMSF conference, the ASIC commissioner outlined a number of concerns which had been identified as part of an SMSF taskforce exercise, including that investors were "not warned about the very real risk of not having access to a statutory compensation scheme in the event of theft or fraud".
"Going forward, this will be an area of focus for us," Kell said. "We expect to see advice providers warning investors about this risk."
He said that ASIC would, in the next few weeks, be releasing a report containing the taskforce findings and identifying a number of practical steps advice providers could take to improve the quality of SMSF advice they provide to investors.
"We think there are a number of things advice providers and investors need to consider and discuss before setting up an SMSF," he said.
Kell said these included:
- the roles and responsibilities associated with being a trustee of an SMSF
- the time, cost and resources required to run an SMSF
- the risks associated with an SMSF structure (ie, not having access to a Government compensation scheme)
- whether the investor has the necessary skills and expertise to make the investment decisions for the SMSF, and
- the importance of asset diversification.
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