The Australian Securities and Investments Commission (ASIC) has been forced to set up a taskforce to conduct surveillance on spruikers pushing the use of self-managed super funds (SMSF) to leverage up heavily into residential properties located typically in depressed markets such as Queensland.
ASIC commissioner Peter Kell is concerned SMSFs are being set up by members who don’t have the resources, experience or the understanding to manage the fund. While the Government changed laws a couple of years ago to allow super funds to borrow and leverage themselves into property, doing so may breach obligations to maintain liquidity and fails to diversify the portfolio.
Mr Kell told the Australian, “We know enough from history to be certain that spruikers will push property in the good times: we want to make sure this does not create problems in the SMSF sector when the cycle invariably turns,”
“And in particular we don’t want SMSFs to be the preferred vehicle for dodgy property spruikers,”
» Setting up an SMSF to buy property a risky strategy – The Australian, 13th November 2012.