After reporting a sharp rise in advertisements touting SMSFs offering safe returns on high-risk investments, ASIC has responded by investigating a new way to introduce new disclosure rules targeting SMSF advice.
ASIC deputy chairman Peter Kell has
indicated that “we’re taking a good hard look at some of the marketing that’s going on, particularly around property spruiking but also more generally.”
ASIC is currently working closely with the ATO to identify risks regarding financial fraud in the area and has seen an increase in inappropriate advice exacerbated by low interest rates. The security watchdog has expressed its concern about misleading marketing campaigns that offer safe returns on high-risk investments, such as promises of a guaranteed rental return that “doesn’t stand up to scrutiny”, Mr Kell said. “Unlicensed advisers who are trying to “get their hands on people’s money as fast as they can” or do not realise it’s a regulated space with standards are another key concern,” he added.
It has been reported that with the rapid growth of the sector half a million funds managing nearly one-third of the $1.6 trillion of super assets is attracting opportunists and inappropriate advice of any kind was now very likely to include an SMSF element.
There has been a strong message on the need to be cautious echoed throughout the industry and PwC partner Paul Brassil reinforced this message by saying that he “welcomed the regulator’s efforts”, and in light of seeing an increase in SMSF advertising he has said, “people need to be very cautious about rushing into things that are being sold.” He added that, “the ads – discussed in dinner party or BBQ conversations – lulled people into thinking their fund could hold holiday homes or paintings that they could use themselves. If they did – against the rules – they risked tax penalties of 47 per cent.”
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