Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Association offers alternative to SMSF lending ban

The SMSF Association (SMSFA) has urged the government to consider a range of alternatives to a ban on limited recourse borrowing arrangements (LRBAs), including limiting the use of personal guarantees.

In its submission to the Financial System Inquiry’s final report, SMSFA said it believed the use of LRBAs by superannuation funds can be a successful strategy to build retirement savings.

Limiting the use of personal guarantees by SMSF members is a policy measure that could potentially minimise risk in leverage used by SMSFs, SMSFA stated.

“Personal guarantees given by members of SMSFs allow the SMSF to undertake larger borrowings with higher loan-to-value ratios,” the submission stated.

“Without personal guarantees, an SMSF would need a greater amount to undertake investment via an LRBA in view of stricter lending policies that could be expected.”

Advertisement
Advertisement

PROMOTED FEATURES


SMSFA also called on the government to consider bringing LRBAs under the Australian Financial Services Licence (AFSL) regime, a view that is continuing to gather industry support.

“Bringing LRBAs into the AFSL regime will ensure that providing advice on LRBAs falls under the Future of Financial Advice provisions. This will mean that the best interest duty obligations and the ban on conflicted remuneration will apply to LRBA advice,” the submission stated.

SMSFA also stressed that ASIC, as the corporate regulator, needs to be appropriately resourced to “police” advice provided to SMSF trustees on LRBAs.

“Even without including LRBAs as a financial product, increased ASIC resourcing would allow the regulator to take more action on advice provided to SMSFs on LRBAs by unlicensed individuals, or poor advice provided by licensed individuals,” the submission stated.

 

Association offers alternative to SMSF lending ban
mortgagebusiness

Latest News

The federal government has unveiled a plan to overhaul responsible lending laws by shifting from a “lender beware” model to a “borrowe...

Housing affordability pressures have intensified for first home buyers in five of Australia’s major capitals, who now require more time to...

ASIC has directed fund managers to do more to remain “true to label” after finding that funds labelled as cash had assets other than cas...

FROM THE WEB
podcast

LATEST PODCAST: How lenders are viewing the property price outlook

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

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