The corporate regulator has initiated action against a fintech for allegedly misleading customers about the benefits of investing in residential property in self-managed superannuation funds.
Squirrel Superannuation Services, an SMSF platform provider, faced the Federal Court on 23 December 2020 for allegedly marketing misleading information between January 2015 and July 2018.
In the brochure, How buying established residential property can super charge your superannuation?, which it distributed via email and hard copies at a seminar held on 28 April 2015, ASIC alleges, Squirrel made a number of misleading representations.
One of which is that the promised returns for residential property in metropolitan locations doubles in value every seven to 10 years and generates rental returns of around 4-5% per annum.
Another is highlighting the "remarkable" difference in returns between superannuation fund (7%) and using an SMSF that purchased residential property (14%).
Squirrel sold the idea that that costs of managing an investment property via an SMSF are "surprisingly low" compared with using a financial planner to select a series of managed investment funds, which ASIC found contentious.
The Sydney-based firm ceased distributing the material in July 2018. Five months later, ASIC commenced its investigation.
"The provision of misleading information about SMSFs undermines the SMSF sector and limits the ability of Australian consumers to make confident and informed decisions about their superannuation savings," ASIC said.
The regulator is seeking declarations, pecuniary penalties and cost orders against Squirrel. The court is yet to set a date for the first case management hearing.