The ICAA recently issued a submission to ASIC's Consultation Paper 216: Advice on SMSFs: Specific disclosure requirements and SMSF costs (CP216).
While the ICAA stated it broadly supports measures that will enhance information given to trustees, it also questioned whether the consultation’s proposals are “too narrowly focused in the wrong area".
“As advice is not a requirement for those considering an SMSF, we must ensure that anyone - regardless of whether they seek professional advice or not - is aware of certain issues and considerations prior to setting up an SMSF,” the ICAA stated.
“We believe the greater risk of awareness of the responsibilities for potential SMSF trustees lies not with the provision of advice from financial advisers and professionals, but with those who are not seeking any advice or receiving advice from non-professional and unregulated sources.”
Responding to the proposal to require practitioners to warn clients about the lack of statutory compensation for SMSFs, the ICAA stated this warning already exists within the ATO’s trustee declaration form, and that additional information could be “overwhelming”.
“We therefore caution that proceeding with the inclusion of this disclosure may not achieve its objective,” the ICAA said.
The ICAA also stated that if it is ultimately deemed appropriate to include specific compensation disclosures for SMSFs, then it is “warranted” that similar disclosure for other types of funds should also be included.
“It is not appropriate to ‘warn’ SMSF trustees about the lack of access to a statutory compensation scheme without discussion on how the scheme applies to other types of superannuation funds,” the ICAA stated.
“In order to provide a balanced, educational and useful disclosure, potential trustees should also understand that being a member of an APRA-regulated fund does not guarantee they will be covered under the scheme in the event of fraud.”
The institute has also said it encourages “appropriate consideration” from ASIC before further compliance is required from advisers.
“We caution that the proposed requirements appear to respond to issues that are not systemic in nature,” the ICAA stated.
“Whilst ASIC’s findings in its recent review of SMSF advice noted there was room for improvement in some areas, most advice was found to be adequate. This is despite the fact the pieces of advice being reviewed were considered to be high risk.”
