Trouble in the SMSF sector should be blamed on spruikers rather than brokers or lenders, one prominent industry figure believes.
FBAA chief executive Peter White said that while SMSF lending might become a little more restricted in light of the crackdown on investor lending, it is not the sector’s core problem.
“If [the regulators] want to fix SMSF lending, they’ve got to focus on property spruikers, not the lending side of things,” he told The Adviser.
“It’s the property spruikers that are creating the problem in the SMSF lending space, and that’s where the rules need to change.”
Mr White said it might be a matter of changing legislation so that people are not allowed to allocate a property to their SMSF that is less than two years’ old.
“That cuts out the property spruiker, because that’s the sector – the one- to two-year-old properties,” he said.
“And if you do that, you’ll probably take care of 70 to 80 per cent of the problems in that area that are being represented through the Financial System Inquiry.”
Mr White said the future of SMSF lending was still unclear, but that “a slight contraction” in the market is the most likely outcome.
According to a recent survey by The Adviser, 57 per cent of respondents think less people will purchase property via their SMSF in light of the new lending landscape.
However, Mr White said brokers who specialise in SMSF lending should not be scared off by the prediction that the sector will shrink.
“If you’ve got a strong SMSF space, it doesn’t mean that space is wrong or that space is going to collapse,” he said.
“Anyone involved in lending should have diversification in what they’re doing. I think being mono-stream has a potential risk to it, so I’d recommend that all brokers having some sort of diversification on top of their core business.”
[Related: ASIC takes action on property spruiking firm]
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