SMSF advice review to focus on set-up suitability and early access: ASIC

Both illegal early access and SMSF suitability are known concerns of the regulator, but Sciacca noted that the driver of this review is ASIC’s desire to audit the efficacy of its earlier guidance on SMSF advice. 

The corporate regulator will conduct a review into self-managed superannuation advice to gauge the efficacy of its December 2022 information sheet on the sector, with a clear focus on two key issues; inappropriate SMSF set-up advice and early access to superannuation.

In the 2023-27 Corporate Plan ASIC released early last week, ASIC briefly flagged that it would review “advice in relation to the establishment of SMSFs”, with the project estimated to take over a year.

Speaking at the SMSF Association’s National Conference in Brisbane this week, ASIC advice and investment lead Leah Sciacca (pictured) said the review would involve the regulator taking a “sample” of SMSF advice and assessing its compliance, with a sharp eye on whether clients were suitable candidates to be recommended for SMSF set-up, and whether any early access breached have occurred.

The early access issue is an emerging one for both ASIC and the Australian Tax Office. Sciacca was joined on the panel by the ATO’s deputy commissioner superannuation and employer obligations, Emma Rosenszweig, who said that while the amount of funds being accessed illegally has decreased, the quantum of funds (over $200 million in FY22) is still too high. At a thought leadership breakfast earlier that day, Heffron managing director Meg Heffron said illegal early access scams are getting more and more sophisticated, which is heightening the regulator’s sensitivity to early access issues.

While the regulator’s concern over early access and SMSF suitability is clear, Sciacca noted that the review is being scheduled now to ascertain whether ASIC’s earlier guidance on SMSF advice has proved useful and is being adhered to.

“We released the information sheet in December 2022, and it highlights a number of key areas and issues, and the idea of developing that info sheet and releasing it was to assist industry,” Sciacca said. “So with this review, in particular, we will want to see how that has assisted industry and addressed the areas that we highlighted in that report.

“We’ve done these reviews in the past and they always have a consistent objective in terms of assessing the quality of the advance being provided, whether it meets the conduct and disclosure obligations required,” she continued. “That’s the overarching objective of why we do these these types of reviews.”

In terms of the methodology being used for the review, Sciacca said the regulator “hasn’t landed” on that yet, with each review requiring different methods.

“With the last few reviews they have had slightly different methodologies and slightly different sample sizes,” she said. “This review is likely to be the same.”