In its submission to ASIC on Consultation Paper 216 (CP 216), the SMSF Professionals' Association of Australia (SPAA) outlined its stance on adviser training and education, stating its necessary advisers have the “competencies and skills” to inform potential trustees about the suitability of an SMSF to their circumstances.
“In line with this, SPAA has consistently argued that the proposed update of RG 146 for the training of advisers should include a specialist SMSF topic if advisers wish to provide advice on SMSFs,” said SPAA chief executive Andrea Slattery.
“We were surprised that ASIC had not suggested an additional specific topic in light of recent statements and research issued by ASIC that has shown concern for advice practices.
“Similarly, it is surprising ASIC has not sought specific SMSF competencies in the updated RG 146 when it has concerns regarding the quality of disclosures made to potential SMSF trustees about the risks in being a trustee.
“We believe that including an SMSF topic in RG 146, and recognising it as a specialist area of superannuation advice, will increase the level of professionalism and understanding of financial advisers who advise on the establishment and operation of SMSFs, leading to increased consumer protection.”
SPAA also stated ASIC’s recommendation that advisers must provide a warning that SMSFs are not entitled to compensation under Part 23 of the SIS Act is “too simplistic.”
“This approach ignores the complex nature of compensation for funds affected by fraud or theft. APRA-regulated funds are not guaranteed compensation under the SIS Act for fraud or theft and the fact that SMSFs do have other avenues for seeking compensation for theft or fraud has been ignored,” SPAA stated.
In its submission, SPAA also drew ASIC’s attention to the “uncertain nature” of Part 23 of the SIS Act for APRA-regulated funds.
“The proposed disclosure perpetuates the common misconception that APRA-regulated funds will definitely receive compensation if the fund is a victim of fraud or theft,” SPAA stated.
“Instead, we believe any warning that SMSFs are not entitled to Part 23 compensation should be made in the broader context of advisers discussing all compensation arrangements available to SMSFs.”
