Nothing is free: Two SMSF services fined by ASIC for misleading claims
Property investors are increasingly using self-managed super funds (SMSF) as low cost investment vehicles.
But recent moves by the Australian Securities and Investments Commission (ASIC) serve as a helpful reminder to SMSF investors that nothing comes for free.
ASIC issued three infringement notices to Esuperfund Pty Ltd for false or misleading online advertising. The online SMSF establishment and administration service provider has paid $30,600 in penalties after it ran advertisements and articles that misrepresented the costs and benefits of using its services or SMSFs. The three statements ran between 31 January 2014 and 8 May 2014.
ASIC was concerned that one advertisement implied that Esuperfund clients would not pay any fees or costs when establishing a SMSF in 2014, while another article, entitled '9 Benefits of Setting Up A Self Managed Super Fund' misrepresented the costs associated with SMSFs in comparison to retail and industry superannuation funds.
According to ASIC, a third advertisement falsely claimed that ASIC reviewed Esuperfund's operations yearly to make sure it was complying with its legal obligations.
Esuperfund has now removed the statements from its website.
Another SMSF service provider, Your Super Accountant, paid $2,040 after receiving an infringement notice for making potentially misleading statements about the costs of setting up a SMSF when using their services.
Despite publishing claims on their website homepage that it was free to set up a SMSF with Your Super Accountant, investors were required to pay $200 upfront (20% of the annual administration fee) in order to be eligible for the "free" set up. The website homepage did not disclose that condition, or any others, when advertising the "free" service.
ASIC noted that using a corporate trustee to set up a fund is never free. According to ASIC deputy chairman Peter Kell, consumers should be on the lookout for services that advertise themselves as "free".
"Some terms and phrases – such as "free" – have such a strong connotation for consumers that particular care should be taken so that investors are not misled," said Kell.
"Setting up an SMSF is an extremely important financial decision and consumers should clearly understand the set up costs involved. ASIC has a particular focus on misleading claims that a financial product or service is 'free', as this may lead consumers to make inappropriate financial decisions," he said.
Your Super Account has now amended the content on its website.