ASIC has today released Consultation Paper 216 - Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs.

CP216 follows ASIC’s Report 337 - SMSFs: Improving the quality of advice given to investors, released on 18 April 2013.

Report 337 identified inadequacies in the quality of advice being provided to SMSF trustees both in relation to the costs and financial risks of establishing an SMSF, as well as the duties and obligations assumed by the trustees.

ASIC is seeking feedback on its proposals to:

  • improve the quality of SMSF advice by requiring AFS licensees to provide specific disclosures that may influence an investor’s decision to establish or switch to an SMSF; and
  • provide guidance on the importance of considering cost issues when recommending that a client establish or switch to an SMSF.

CP216 is accompanied by analysis prepared by actuaries, Rice Warner, about the minimum cost effective balance of an SMSF having regard to the costs of setting up and maintaining the fund.

Rice Warner’s analysis found that an SMSF with a minimum balance of $200,000 would require significant self-administration by the trustees to be competitive with an APRA regulated fund. SMSFs with minimum balances of $500,000 or more are cost competitive on a full outsourced administration basis.

Submissions are due by 11 November 2013.

ASIC intends to make a class order and release a regulatory guide in February 2014.