Mandatory licensing for SMSF advice imperative: ASFA

The recent release by ASIC of a consultation paper on requirements for advice provided to self-managed superannuation funds (SMSFs) indicates it is poised to tighten the rules on advice given to SMSFs by licensed advisers. In this context, the Association of Superannuation Funds of Australia (ASFA) has reignited its call for mandatory Australian Financial Services (AFS) licensing for all persons involved in the sale of investment products to SMSFs.

Quality advice is essential to ensuring the growing pool of money in SMSFs is managed in a way that delivers effective outcomes in retirement and that the members of such funds know what investment risks they may be facing. ASFA has expressed concerned previously that many SMSF holders are being encouraged or incentivised to invest in products or schemes which may not be in their best financial interest.

It’s encouraging that the regulator is examining the governance of the provision of financial advice in this sector, as it is in the best interest of the Australian community that concessionally-taxed superannuation contributions are managed prudently.

ASFA considers that an essential first step should be ensuring any individual or firm marketing products to an SMSF hold an Australian Financial Services License (AFSL). Such a requirement would help ensure any person giving advice to an SMSF is suitably qualified to make recommendations that are in the best interest of their client. It would also mean that the adviser would need to hold appropriate professional indemnity insurance and be subject to the supervision of ASIC.

Most SMSF trustees establish their SMSF in order to exercise more control. Such intentions should not be compromised by inappropriate advice or mis-selling of investment products by financial advisers. Mandating that all advisers to SMSFs are licensed and ensuring compliance is necessary to help achieve this.

For further information, please contact:

Lisa Chikarovski, Media Manager, 0451 949 300

About ASFA

ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation whose aim is to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.