Skip to main content
customised%20solutions

ASIC’s Advice for SMSFs RG 205

Anyone would think that ASIC had the accountants’ exemption expiry in mind with this timely offering!  The key points are:

Relevant Conduct and Disclosure Obligations

  • A reminder (or an informer) that LARs have a best interest duty (s961B, G and J).
  • A reminder to give clients an SoA before the clients act on advice.
  • All SoA’s covering SMSF’s must include switching advice.
  • Without appropriate consideration you will be in breach of your obligations.

Lack of Statutory Compensation

  • LARSs must advise clients that they will fall outside of the compensation framework available to investors in APRA funds. This means they will not be eligible for compensation if the SMSF suffers loss as a result of theft or fraud in an underlying investment.
  • Without appropriate consideration you will be in breach of your obligations.

Impact of Insurance

  • LARs are obligated to consider appropriate and affordable insurance and include this information in the SoA. ASIC warn of severe concerns if a client had cover prior to the establishment of an SMSF but not afterwards.
  • Without appropriate consideration you will be in breach of your obligations.

finance wise note: virtually no LAR is authorised to provide product advice so good luck with that one.

Access to Complaints Mechanisms

  • LARs are obligated to communicate the inability to access certain dispute mechanisms. ASIC warn of severe concerns if a client is uninformed.
  • Without appropriate consideration you will be in breach of your obligations.

The appropriateness of different SMSF structures

  • ASIC explain that will be greatly displeased where clients have been inadequately advised on SMSF structures.
  • Without appropriate consideration you will be in breach of your obligations.

Trustee obligations

  • ASIC are likely to look unfavourably on advice documents that exclude clear communication concerning trustees time, skills and obligations necessary to operate an SMSF.
  • If there is no consideration you will be in breach of your obligations.

Trustee obligations to develop an investment strategy

If the advice concerning a SMSF’s Investment Strategy is inappropriate given the members risk appetite and investment goals you will be in breach.

finance wise note: this topic is not covered in dfp 1 or dfp 2.

Additional information to be included in a SoA

  • A LAR needs to describe potential benefits that may be lost and other significant consequences of switching. This sounds similar to a previous area but ASIC are specifically interested in exit fees or other charges; loss of rights or benefits like insurances and compensation; loss of other opportunities ie discount health insurance or free financial advice; tax consequences; and anything else ..
  • Without appropriate consideration .. etc.

The finance wise Solution

Join our license as a LAR and this is all dealt with via our SoA template and prior to that our induction video and our practice integration process.

Register your interest in becoming a finance wise Limited Authorised Representative.