04-302 ASIC campaign to stamp out illegal access to super schemes
Tuesday 21 September 2004
The Australian Securities and Investments Commission (ASIC) is conducting a nationwide campaign against illegal early access to superannuation, working closely with the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA).
This campaign follows a joint warning issued by ASIC and the ATO in February to be wary of schemes that falsely claim that consumers can withdraw their super, or use a self-managed fund, to pay off all their debts, to meet everyday expenses or for purchases such as a family home. These schemes typically involve substantial payments to the scheme promoter to gain access to superannuation savings.
‘We are concerned that people’s hard-earned retirement savings could end up in the pockets of these promoters’, ASIC’s Executive Director of Financial Services Regulation, Mr Ian Johnston said.
‘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’, Mr Johnston said.
In the last two months, ASIC has tested over 50 companies and individuals for compliance with relevant financial services laws. A number of these compliance checks are ongoing. The activities detected under ASIC’s campaign have raised concerns about:
misleading conduct or statements (including advertising and promotional material) inducing people to dispose of their existing superannuation interests and establish a self-managed superannuation fund (SMSF); and
unlicensed financial services, including advice and dealing in financial products.
Generally speaking, to comply with the law all members of a SMSF must also be the trustees of the fund (or the directors of a corporate trustee).
‘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’, Mr Johnston said.
As a trustee of a SMSF, a person must keep the assets of the fund separate from other assets, manage the assets in accordance with strict investment rules and operate the fund for the sole purpose of providing retirement benefits.
To educate the community about these schemes, ASIC is working with the superannuation industry to develop up-to-date information for consumers, trustees, administrators, planners, accountants and other professionals who work in the area of superannuation.
‘I am delighted that a number of superannuation fund trustees have already agreed to distribute information published by ASIC warning against illegal access to superannuation’, Mr Johnston said.
‘It indicates the level of concern the superannuation industry has about the threat that this activity poses to their members’ retirement benefits’, Mr Johnston added.
In the past four years, ASIC has initiated 29 civil and eight criminal enforcement actions against promoters of illegal early access to superannuation schemes. These actions alone account for more than $20 million dollars in superannuation benefits illegally accessed. For more information about ASIC’s enforcement actions, go to the ASIC consumer protection website, FIDO at www.fido.asic.gov.au/super