Powered by MOMENTUM MEDIA
subscribe to our newsletter
SMSF loans could leave investors ‘high and dry’: Frydenberg

SMSF loans could leave investors ‘high and dry’: Frydenberg

Assistant Treasurer Josh Frydenberg has revealed his concerns about the effects of leveraging in superannuation in the event of a “major” external economic shock.

Speaking exclusively to Sterling Publishing, Mr Frydenberg said he’s taking a serious look at the Financial System Inquiry’s (FSI’s) recommendation to ban borrowing in SMSFs.

“This is one of the recommendations out of FSI that I am interested in looking at because superannuation is principally a retirement income stream and if people can leverage up, they run the risk that if there is a major external economic shock, they could be left high and dry.

Advertisement
Advertisement

“That’s neither in the interests of the superannuant or the government,” he said.

Mr Frydenberg announced late last month that the government intends to openly consult on this recommendation, and will explore options such as banning personal guarantees by SMSFs and improving the standard of advice given to trustees on leveraged investments.

His comments come after FBAA chief executive Peter White told Mortgage Business that he held discussions with Mr Frydenberg earlier this month during which the assistant treasurer shared his concerns over SMSF lending.

During a private dinner function in Canberra on 25 February, Mr White admitted he was able to have “limited discussions” with Mr Frydenberg and gauge his feelings towards SMSF lending and other issues impacting the Australian mortgage market.

“We had a common thought process in regards to limited liability funding for SMSF loans,” he said.

“It’s a concern and if the data and analysis shows that it’s a growing concern then, depending on further deliberation on that, potentially things need to be done or could be done.

“Just because these loans exist doesn’t mean they should be there. It doesn’t mean they should go either, but it needs a proper thought process behind it.

“He [Frydenberg] is concerned about it.”

SMSF loans could leave investors ‘high and dry’: Frydenberg
mortgagebusiness

 

Latest News

There’s a “very real chance” that the Reserve Bank will lower the cash rate three months in a row, according to ANZ Research. ...

Technology company Lakeba Group has appointed financial services specialist Roy McKelvie as a non-executive director, as the company prepare...

The corporate regulator has released a report outlining its decisions on relief applications from firms operating under the Corporations Act...

FROM THE WEB
podcast

LATEST PODCAST: Broker share and Westpac U-turn

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.