Among “key projects” identified by the Australian Securities and Investments Commission for the financial year ahead, the regulator will focus on the quality of SMSF financial advice.
ASIC will test the quality of advice to consumer who have set up SMSFs, checking compliance with best interest and other financial advice obligations.
According to ASIC’s Corporate Plan, it will conduct shadow shopping investigations of SMSF advisers.
At last count there were 590,742 SMSFs in operation, with assets of $674 billion.
ASIC says: “The financial sector is changing rapidly. Global financial markets have evolved faster over the past 10 years that at any time in history. New technologies, including distributed ledger and social media, will alter people’s engagement with markets and product service providers.
“Product design and sales and distribution practices remain a concern to ASIC.”
In the past few months, ASIC has toughened its stance on SMSF auditor independence
Last week, it disqualified Kathleen Whittle of New South Wales after finding that she breached independence requirements by auditing the funds of her immediate and close family members.
In August, it disqualified Ross Russo of New South Wales for auditing the fund of a close family friend and failing to meet the audit evidence requirements of the Australian auditing standards.
And in July, the regulator disqualified Neil Wilson of Victoria, after finding that he audited a fund of which he was a member. Wilson also breached documentation requirements.
Since 2013, the superannuation rules have required that all SMSF auditors be registered with ASIC.
The regulator says trustees and members should check whether their auditor is registered by searching its SMSF auditor register.
ASIC commissioner John Price says: “SMSF auditors play a fundamental role in promoting confidence in the SMSF sector, so it is crucial that they adhere to ethical and professional standards.
“ASIC will continue to take action where the conduct of SMSF auditors is inadequate.”