ASIC fines SMSF administrators for misleading statements

Nest egg, superannuaiton, SMSF, retirement
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ATO Education Direction courseASIC has imposed penalties on two SMSF administrators for ‘false or misleading’ statements, Esuperfund and Your Super Accountant.

Esuperfund

ASIC imposed a total of $ 30,600 in penalties on SMSF administrator Esuperfund for “false or misleading online advertising”.

The three penalties, each for $10,200, relate to statements on the Esuperfund website during 2014.

First Infringement Notice

On the ‘Why Us’ Esuperfund page “a representation was made that ASIC annually reviewed Esuper’s operations to ensure that Esuper complied with all of its licensing obligations” when this was not the case.

Second Infringement Notice

The second infringement notice related to a “Headline Advertisement”, which said that:

“Fees include the Audit and ALL other SMSF Compliance Requirements”

However ASIC points out that this did not include the:

  • ATO supervisory levy
  • Fees involved in set up of a corporate trustee
  • Fees relating to the investments of the SMSF

Third infringement notice

The third infringement notice related to three issues with an article by Esuperfund, titled “9 Benefits of Setting Up A Self Managed Super Fund”.

Firstly ASIC says that the article, a copy of which can be found in the infringement notice on the ASIC website, made the claim that:

“in the near future, major retail and industry superannuation funds will experience payout difficulties due to insufficient liquidity as baby boomers begin to retire and worker contributions are insufficient to meet retirees withdrawals”

ASIC took issue with this claim as it was opinion, not “recent analysis” as the article suggested.

Secondly the article made the claim that, in ASICs words, “a person who holds their superannuation in an SMSF is the owner of all of the assets held by the SMSF and is able to decide when they can access their own superannuation benefit”. This “failed to take into account” the preservation age and condition of release restrictions.

The third issue ASIC had was the article was the taxation claims made in relation to pensions, including that:

  • “it gave the impression that the tax implications for benefits held in SMSFs were advantageous compared with the tax implications for benefits held in industry and retail superannuation funds”
  • “it gave the impression that a person who held their superannuation in an industry or retail superannuation fund had no control over their tax refunds”
  • “it gave the impression that a special tax rate was applied to SMSFs”

ASIC referred to each of these impressions as “factually incorrect”.

Esuperfund made changes to its website “following ASIC’s concerns”.

Your Super Accountant

ASIC has also issued an infringement notice against another SMSF administrator, Your Super Accountant, for “making potentially misleading statements”.

Your Super Accountant paid a $2,040 penalty for a statement on their website in January 2014, which referred to ‘free’ SMSF setup. ASIC was “concerned” that “the conditions for fund set up required investors to pay $200 upfront – 20% of the annual administration fee – to be eligible for ‘free’ fund set up”.

Also, if an SMSF was set up with a corporate trustee than it would not be free “under any circumstance”. Instead consumers had to pay $630 for the set up of an SMSF with a corporate trustee.

Because of these factors ASIC found that the website was “false or misleading”. ASIC says that Your Super Accountant “has taken steps to correct its website”

ASIC infringement notices

ASIC says that it can issue such a penalty “where it has reasonable grounds to believe a person has contravened certain consumer protection laws” though payment of the penalty it is “not an admission of a contravention of the Australian Securities and Investment Commission Act 2001 consumer protection provisions”.

The maximum penalties that could apply is currently set at $340,000 for individuals or $1,700,000 for companies. Though ASIC does not detail how the penalties imposed were determined.

According to the infringement notice, if the penalty is paid:

  • ASIC or the Commonwealth won’t bring criminal or civil action against the business for the conduct
  • the business “will not be regarded” as having committed an offence

ASIC refers people to Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance for information on how ASIC believes services such as SMSF set up should be marketed.

The ASIC infringement notices are available on the ASIC website:

Esuperfund:

Your Super Accountant:

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