Whilst there has been a clampdown on educational requirements for advisers and accountants, the Government seems to have glossed over the wider industry, one stakeholder believes.
Currently anyone can promote SMSFs to potential investors, with rogue advisers failing to alert common pitfalls.
"The loophole exists that if you're not under an Australian Financial Services License (AFSL) or accounting regime, you actually don't have to be licensed to help someone establish an SMSF," Chan & Naylor director of financial planning David Hasib told InvestorDaily.
"In particular, property spruikers are doing this quite successfully," he said.
Under the current law, a property spruiker can suggest an individual to start an SMSF, get the bank to lend money to the SMSF then buy one of his or her properties.
"[They] don't have to be licensed to say that to you. There is no due diligence, no statement of advice, there is nothing. How is the best interest of the client assessed? It doesn't fall under one of those licensing regimes. People are absolutely making a mockery of it and taking complete advantage of this opportunity," Mr Hasib said.
He explained that anyone who wants to promote superannuation, regardless of whether it is an SMSF or not, needs to be authorised under an AFSL.
"I'm not saying a property spruiker shouldn't do this, I'm saying they need to do it under a governing body which provides a compliance regime and a duty of care to the client," he said.
According to Mr Hasib, ASIC has acknowledged inadequacies in the current regulatory framework and will tighten qualification requirements for advisers in the upcoming Future of Financial Advice (FOFA) reforms. But urgent action is needed now to ensure bad advice is not allowed to slip through the net in the run up to the changes in June 2013.
ASIC should enforce requirements such as a diploma in financial planning, including a sub-competency in SMSFs, increasing continuing professional development (CPD) hours, and a yearly exam.
"Penalties should be put in place for those continuing to advise without the required qualifications," Mr Hasib said.
"Penalties should be severe, ranging from an industry ban to monetary penalties or even criminal charges for serial offenders," he said.
