ASIC releases guidance on SMSF advice

ASIC has released two information sheets for Australian financial services (AFS) licensees (including limited AFS licensees) and their representatives who provide personal advice to retail clients about self-managed superannuation funds (SMSFs).

The information sheets are Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks (INFO 205) and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206).

The information sheets set out ASIC’s views on the conduct and disclosure obligations of advisers under the Corporations Act and include a number of compliance tips on matters that ASIC is likely to look at when undertaking surveillance in this area.

Disclosure of risks
INFO 205 explains:

  • the relevant conduct and disclosure obligations
  • the risks that should be considered by the adviser and disclosed to the client when providing personal advice about SMSFs, including:
    ◦the lack of statutory compensation
    ◦the impact on insurance
    ◦access to complaints mechanisms
    ◦the appropriateness of different SMSF structures
    ◦trustee obligations and the time and skills necessary to operate an SMSF
    ◦trustee obligations to develop an investment strategy
    ◦the need to consider an exit strategy
  • the additional information that must be included in a Statement of Advice (SOA).

Disclosure of costs
INFO 206 explains:

  • the relevant conduct and disclosure obligations
  • the need for advice on the cost-effectiveness of an SMSF – in particular, if the starting balance is below $200,000
  • the need for advice on the costs of setting up, operating and winding up an SMSF
  • the need for advice on the continued suitability of an SMSF for the client.
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