ASIC and the ATO have advised they will have an increased focus on property one-stop-shops.
This will include sharing data and intelligence, and ASIC taking enforcement action where it sees unscrupulous behaviour.
More than 590,000 SMSFs hold assets worth nearly $697 billion, which is 30% of funds held in superannuation.
Gaining control over their investments is a key motivation for consumers to set up an SMSF with recent years seeing a growing interest in using SMSFs as a vehicle for investing in property.
The extra eye over one stop property shops was announced when ASIC revealed around 90% of financial advice on setting up a self-managed super fund (SMSF) did not comply with relevant laws.
ASIC today released Report 575 SMSFs: Improving the quality of advice and member experiences and Report 576 Member experiences with self-managed superannuation funds.
ASIC reviewed 250 client files randomly selected based on Australian Taxation Office (ATO) data and assessed compliance with the Corporations Act’s ‘best interests’ duty and related obligations.
ASIC Deputy Chair Peter Kell said the standard of advice on SMSFs must improve.
“A healthy and robust SMSF sector is an important part of our super system.
“However, it is clear lots of people are setting up self-managed super funds without knowing whether this is the best option.
“The financial advice sector has significant work to do to lift their performance on this issue.”
The interviews also identified a growing use of ‘one-stop-shops’ where the adviser has a relationship with a developer or a real estate agent whose products the person is encouraged to invest in.
“This put people at increased risk of getting poor advice that did not take account of their personal circumstances or is not given in their best interests,” ASIC found.