Mr Jeremy Cooper, Deputy Chairman of the Australian Securities and Investments Commission (ASIC), today sent a clear message to accountants that ASIC is looking to take enforcement action where they give misleading advice about self-managed superannuation funds (SMSFs).

Misleading advice

‘Accountants who do not hold an Australian financial services licence (AFSL) should be aware that ASIC is able to investigate and take action against anyone (whether licensed or not) who gives misleading or deceptive advice about financial products, including SMSFs’, Mr Cooper said.

‘The licence exemption enjoyed by accountants does not extend to giving misleading advice. ASIC has the power to act and we will do so in appropriate cases’, he said.

Some things we are on the lookout for

ASIC will be looking for instances where an accountant:

• has advised a client to establish an SMSF when their current superannuation savings are insufficient and their circumstances do not otherwise support the advice;
• has failed to advise a client properly about ongoing costs and the time and skill needed to administer an SMSF;
• without an AFSL, has failed to advise a client in writing that they are not licensed to provide financial product advice, and that the client should consider taking advice from an AFSL holder before making a decision; or
• has given financial product advice, including about switching to an SMSF or the investment strategy that an SMSF should pursue, without an AFSL.

Early access

ASIC will also be on the lookout for more serious misconduct, including suggestions that superannuants can get ‘early access’ to their superannuation savings via the establishment of an SMSF.

Low-value SMSFs

‘We will be looking for cases where SMSFs have been recommended to people with insufficient superannuation savings. While we will always look at the individual circumstances of each case, as a rough guide, we regard an SMSF with a fund balance of less than $200,000 as being worth having a closer look. If we look into it and are not satisfied with the advice that has been given, we will take enforcement action against the adviser in appropriate cases’, Mr Cooper said.

Below around a $200,000 fund balance, it is generally accepted that an SMSF is not cost competitive with other available options for superannuation savings. Some people are willing to accept this on the basis that they prefer making their own investment decisions. However, advisers need to make sure that they are not misleading clients into thinking that an SMSF will always put them ahead on costs.

‘People with insufficient superannuation savings should not be advised to set up an SMSF. Advisers should know that self-managed super is not for everyone.’

Accountants can’t advise on investments or switching without a licence

‘Accountants who do not have an AFSL are only allowed to advise a client on the establishment, operation, structuring and valuation of an SMSF, not about investment strategy or whether a client should switch their superannuation savings to one.’

Is there a widespread compliance problem?

‘There is no suggestion that there is a widespread compliance problem with accountants and SMSFs. ASIC simply wants to ensure that the boundaries around the licensing exemption that accountants have are clearly understood and that accountants also understand we have a role to play even though they might not need a licence from us’, he said.

Further information about self-managed superannuation is available from ASIC’s consumer website FIDO at www.fido.gov.au/super