In a statement, the corporate regulator said Sydney-based CMH Financial Group and its sole director Daniel White did not demonstrate that the advice provided was in clients’ best interests and did not comply with product replacement advice disclosure obligations.
The advice included establishing SMSFs where the starting balances were below $200,000, which ASIC believes is not in clients’ best interest when taking into account the impact of CMH’s fees, the statement said.
The clients were also advised to engage in “high-risk gearing” strategies that seemed inappropriate. Further, there was inadequate monitoring and supervision of representatives by CMH, ASIC said.
In response to ASIC’s concerns, CMH has agreed to appoint an independent expert to audit reviews and test the compliance of its SMSF advice. The expert will also review the firm’s conflicts management arrangements and measures for monitoring representatives.
In addition, all advisers at CMH providing SMSF advice will be required to complete SMSF training, the statement said.
ASIC deputy chairman Peter Kell said: “Advice providers need to ensure their processes and documentation demonstrate that they have acted in the best interests of their clients.”
He added: “Setting up an SMSF is a significant financial step for consumers and many factors can impact their decision. It is therefore important that consumers receive quality, compliant advice that will assist them in making informed decisions about their retirement savings.”
Word has it that the legislation also includes the terminology of ‘arranging’ a financial product. So it would seem that even those accountants looking to simply provide ‘factual’ advice and rely on ‘client instructions’ to establish an SMSF will fall foul of the legislation.
But then we all know that accountants aren’t conflicted, so they wouldn’t encourage clients set them up to build/maintain their fee base…would they?
[quote name=”Peter Kelly”]The interesting thing is that an accountant will still be able to set up a SMSF on a client’s instruction post 30 June, but if a SMSF is not in the client’s best interest, the accountant cant recommend they don’t establish it. That would be paramount to providing financial product advice that requires an AFSL.[/quote]
Peter I think we all know that no accountant is going to recommend they don’t establish it, even before 30 June
[quote name=”Peter Kelly”]The interesting thing is that an accountant will still be able to set up a SMSF on a client’s instruction post 30 June, but if a SMSF is not in the client’s best interest, the accountant cant recommend they don’t establish it. That would be paramount to providing financial product advice that requires an AFSL.[/quote]
Peter, I think we all know that Accountants will just continue to establish SMSFs for clients no matter what.
They will simply suggest/recommend the SMSF (off the record) and then note somewhere that the client instructed to start the fund.
Just like how mortgage brokers suggest/recommend a client invest into property (off the record) and they refer to a property spruiker to get a huge commission.
The interesting thing is that an accountant will still be able to set up a SMSF on a client’s instruction post 30 June, but if a SMSF is not in the client’s best interest, the accountant cant recommend they don’t establish it. That would be paramount to providing financial product advice that requires an AFSL.
[quote name=”AJ”]”The advice included establishing SMSFs where the starting balances were below $200,000, which ASIC believes is not in clients’ best interest when taking into account the impact of CMH’s fees”
… because they are “a profession” and have a degree[/quote]
Profession = Ethics (ah, nope! what about…)
Degree = Ethics (No, that doesn’t work either.)
Ah! But a negative times a negative = a POSITIVE (Cheers and back slapping all round!)
So
Profession X degree = Ethics
Well, maybe their minds don’t quite work this way….but what if I’m close? 😉
“The advice included establishing SMSFs where the starting balances were below $200,000, which ASIC believes is not in clients’ best interest when taking into account the impact of CMH’s fees”
Yet Accountants can set up SMSF’s with less than $100,000 (much less in some circumstances, as low as $15,000 with a $6,500 set up fee) with no repercussions, because they are “a profession” and have a degree