SMSFA chief slams regulators, FASEA

SMSF Association chief executive John Maroney has slammed ASIC for a fact sheet published and distributed to SMSF trustees last year.

During a speech at a Pritchitt Partners event in Sydney, the SMSFA chief also took aim at FASEA and the ATO.

Maroney said the figures used in ASIC's SMSF report were of great concern.

"We took issue with some of the figures that ASIC included in the fact sheet because they were unbalanced and inappropriate," he said.

"The average expense figure represented a questionable use of ATO statistics, as a more appropriate figure would relate to the median operational and investment costs of funds under $500,000, which is under $5000 per annum compared to the figure of almost $14,000 used by ASIC."

He also slammed the ATO for frightening SMSF members.

"The ATO also wrote to about 18,000 SMSFs encouraging them to review their investment strategy where they had a high exposure to a single asset class, especially geared property," he said.

"We have encouraged the ATO to be clear in its communication to ensure that all trustees are not frightened unnecessarily when the concern relates to a small component of the whole sector."

He said exposure to residential and commercial property often set the SMSF sector apart from the superannuation system, arguing that there was no need to restrict these holdings as suggested by the ATO.

"One of the distinguishing features between the SMSF sector and the rest of the superannuation system is the exposure to both commercial and residential property, often via limited recourse borrowing arrangements," Maroney said.

"The SMSF sector's exposure to these asset classes is reviewed regularly by the Council of Financial Regulators and their most recent report in 2019 indicated that there was no need to restrict such activities based on concerns about potential systemic risk, due to the low overall potential impact on the property sectors."

FASEA didn't go unscathed either.

"Another key area of concern relates to the manner in which FASEA is executing its mandate, especially in relation to the code of ethics which came into force earlier this month," he said.

"We fully support the goals contained in FASEA's mandate to lift standards of education and ethics, however we would encourage them to undertake more effective consultation with all interested stakeholders to enable smooth implementation of very significant changes."

This, he said, needs to be rectified to smooth the "dynamic" road ahead for the financial advice and wealth industry.

"The marketplace for the whole superannuation system and for financial advice and SMSFs is very dynamic at the moment," Maroney said.

"All of the major banks have announced or commenced movement away from directly providing wealth management activities and owning major dealer groups.

"This will lead to an increased reliance on smaller dealer groups and self-licensed advisers to meet advice needs across the whole financial sector."

He named AMP and IOOF as the major groups committed to providing financial advice amid the fallout from the Banking Royal Commission.

Maroney supported increased competition in the sector, applauding the effort of industry fund Hostplus to offer SMSF options to non-members.

"One interesting move is the offer by industry funds, such as Hostplus, to SMSFs to use some of their investment options without needing to become members," he said.

"We support the continued expansion of investment options, especially in the infrastructure and alternative investment categories, to SMSFs.

"We are strong believers in choice and competition and believe the whole superannuation system will benefit from continued expansion in choice in competition."

He said that despite increased competition, SMSFA did not believe that superannuation sub-sectors were fighting over one another for the largest market share.

"We do not subscribe to the view that there is a contest between different parts of the superannuation system to be the largest part," Maroney said.

"Our aim is to ensure that the SMSF sector remains attractive for those Australians who seek greater control of their own financial destiny in conjunction with their advisers or via their own management of their SMSF.

Read more: SMSFATOFASEAASICSMSFAHostplusJohn MaroneyPritchitt Partners
Link to something A7XlRgFd