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The MFAA has dismissed calls from the Institute of Chartered Accountants in Australia (ICAA) for a review of limited recourse borrowing arrangements (LRBAs), saying the SMSF lending space is operating well as it is.
ICAA head of superannuation Liz Westover recently told The Adviser’s sister publication SMSF Adviser a review of LRBAs was needed to “pre-empt any problems down the track”.
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Her comments came in response to Assistant Treasurer Arthur Sinodinos’ announcement that the Coalition will not be conducting a review of LRBAs, as initially recommended in the 2010 Cooper Review of the superannuation system.
“The last thing we need is for it [SMSF borrowing] to blow up and be an issue and then try and deal with it. Now’s the opportunity to pre-empt anything going wrong, make some decisions about the future of borrowing within super over the long term, and deal with it accordingly,” said Ms Westover.
MFAA chief executive Phil Naylor told The Adviser SMSF lending was already closely monitored and needed no further regulation.
“I've not seen any problems. I think what people are apparently saying is that there might be some problems [further down the track] but I’ve not seen any evidence to date,” he said.
“If ASIC has seen problems they would have jumped on them… I think they have made it clear that they are watching it [SMSF lending] very closely and they will jump on anyone who operates inappropriately in that area very quickly.”
Mr Naylor dismissed the call for a review of SMSF borrowing, saying any issues could be raised at the Financial Services Inquiry (FSI) currently taking place.
“I'd suggest that if there are issues to be raised about SMSF borrowing that it’s appropriate to raise them in the FSI,” he said.
SMSF loans have become very popular in recent years, with an increasing number of brokers now offering the products.
Over 42 per cent of brokers who have integrated an additional product or service in the past 12 months added SMSF loans, according to a recent survey conducted by The Adviser. SMSF loans were also the most nominated product or service respondents said they would integrate into their business in the coming year.
Ms Westover said the ICAA will continue to raise the issue of a review into LRBAs with Senator Sinodinos and other stakeholders.
