Govt to scrutinise SMSF marketing

Focus on sophisticated investments

By Darin Tyson-Chan
Thu 13 Mar 2008

SMSF marketing, sophisticated investment products and early access schemes were all targets for minister Sherry's latest review.

Superannuation and Corporate Law minister Nick Sherry announced yesterday that his main area of focus in the Government's monitoring of the sector would be the aggressive marketing of self-managed superannuation funds (SMSFs).

"The Government is concerned where individuals are subjected to aggressive marketing that they may be persuaded to establish an SMSF without being aware of their roles and responsibilities and without appreciating any of the costs involved," Sherry told delegates at the SMSF Professionals Association of Australia (SPAA) conference.

However, he said the scrutiny was not aimed at any particular segment that was providing advice to SMSFs in the market.

Asset allocation within SMSFs was also an area needing constant attention, according to Sherry.

"The latest data shows a significant overweight of SMSF investments in cash, debt securities and term deposits, many in excess of 35 per cent of their total assets, well beyond what would be considered reasonable in a long-term diversified investment strategy," he said.

Sherry also said that there was a need to monitor the marketing of increasingly sophisticated financial products to the do-it-yourself sector.

"The recent debate concerning the use of instalment warrants shows sophisticated financial investment instruments are increasingly being marketed to SMSFs," Sherry said.

"It is the responsibility of the Government to monitor the growing diversity and complexity of these financial instruments and I will be keeping a very, very close watch on the marketing of sophisticated products to SMSFs and in particular instalment warrants, which are legislated new products," he added.

Sherry said that Government would be increasingly vigilant on early access scams.

"One of the main integrity concerns with SMSFs is the risk that benefits may be accessed prior to preservation age through financial arrangements purporting to be SMSFs and unfortunately the attempts at access are becoming all too frequent," he said.

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