FBAA says SMSF Practices Still Working

The Turnbull Government’s decision to reject a recommendation from the Murray Financial Systems Inquiry (FSI) on self-managed super funds (SMSF) lending has been applauded by the Finance Brokers Association of Australia (FBAA).

Treasury stated it did not agree with the FSI’s recommendation to prohibit limited recourse borrowing arrangements (LRBA) by self-managed super funds (SMSF). This was the only one of 44 recommendations not to gain acceptance.

Peter White, Chief Executive Officer of the FBAA argues the move to reject the recommendation is sound because at present, there just isn’t the mass volume of borrowings yet to cause concern and warrant intervention.

“In reality, the level of activity with borrowing has been small in the overall context of total assets inside the SMSF and broader superannuation sectors.”

“Brokers are also the trusted experts in helping clients borrow funds to enable them to purchase property and other assets in their SMSF’s.”

While the broking business continues to see a rise in SMSF lending for property, Mr White again is quick to warn of the dangers of unscrupulous real estate spruikers posing as financial advisers.

“As brokers we see this as a worsening problem as more and more real estate groups are pushing people into SMSF’s to gear up and purchase property.”

“I have said it before but it bears repeating. The property spruikers create the problem in the SMSF lending space and that is where ASIC needs to focus. The FBAA would like to see a change so that SMSF holders cannot allocate a property to their fund which is less than two years old.”

“That would ensure the spruiker and the ‘middle man’ are not financially involved.”


 

Media Contact: Ben Dobson – 0434 791 084 // Barbara Gorogh – 0435 909 608