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15-192MR ASIC releases guidance on SMSF advice
ASIC has today released two information sheets to improve the quality of advice provided by advisers on self-managed superannuation funds (SMSFs).
The information sheets are Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks (INFO 205) and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206).
The information sheets are intended to assist advisers comply with their conduct and disclosure obligations under the Corporations Act and outline what ASIC looks at when undertaking surveillance in this area. They specify the types of risks and costs that an adviser should consider, discuss and then disclose to clients when providing advice on establishing or switching to, an SMSF.
The information sheets also deal with the cost-effectiveness of an SMSF, making clear ASIC's view that an SMSF with a starting balance of $200,000 or below is unlikely to be in the client’s best interests and that advice to establish one below that threshold is more likely to be scrutinised by ASIC.
ASIC Deputy Chairman Peter Kell said, 'Setting up an SMSF is a significant financial step for consumers and many factors can impact their decision. It is therefore important that consumers receive good quality advice that will assist them in making informed decisions about their retirement savings.
'ASIC wants to ensure that only those investors for whom an SMSF is suitable are advised to establish an SMSF and that our expectations around the standards of advice are clear.
'SMSFs are a key priority for ASIC and we will continue to target inappropriate advice about SMSFs in our surveillance work,' Mr Kell said.
To that end, the information sheets provide 'compliance tips' which indicate the factors that ASIC is likely to look at more closely as part of our surveillance activities.
INFO 205 and INFO 206 follow a consultation paper released in 2013 (13-243MR) on proposals to impose specific disclosure obligations on advisers giving advice on SMSFs.
Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks (INFO 205)
Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206)
Report 442 Response to submissions on CP 216 Advice on SMSFs: Specific disclosure requirements and SMSF costs (REP 442)
In September 2013, ASIC released Consultation Paper 216 Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs (CP 216). We consulted on proposals to impose disclosure obligations on financial services licensees and their authorised representatives when giving personal advice to retail clients on an SMSF.
This followed the release of Report 337 SMSFs: Improving the quality of advice given to investors (REP 337) in April 2013, involving an ASIC review of over 100 investor files relating to the establishment of an SMSF that were provided by financial planners and accountants (Refer 13-081MR).