The Australian Securities and Investments Commission (ASIC) has warned SMSF trustees to be wary of spruikers operating in the Coffs Harbour region who are promoting illegal early release of superannuation strategies.
The operation involves encouraging individuals to establish an SMSF and roll their existing retirement savings into the new fund.
From there, the new trustees are informed they are able to use those monies in the SMSF to pay off debt, purchase assets such as motor vehicles, start a new business, or buy property.
According to ASIC, the spruikers do not charge any upfront fees for the service and are typically approaching people directly on the street or from displays situated outside shopping centres. The promoters are also unlicensed to provide financial advice.
In all circumstances, the regulator is encouraging people to consider their financial situation carefully before choosing to set up an SMSF.
“Setting up and running an SMSF is a complex and costly process, and consumers could end up losing a significant amount of money if they get it wrong,” ASIC said.
“A breach of the ATO’s superannuation rules may result in the consumer facing hefty fines of up to $16,800,” the regulator noted.
ASIC is also recommending anyone considering the establishment of an SMSF to seek financial advice from a properly licensed practitioner.
“Only companies holding an Australian financial services licence, or their currently authorised representatives, can give financial advice about superannuation,” it said.
Consumers can determine if a financial adviser is currently authorised through the ASIC Financial Advisers Register.