ASIC has released two information sheets for Australian financial services (AFS) licensees (including limited AFS licensees) and their representatives who provide personal advice to retail clients about self-managed superannuation funds (SMSFs).

The information sheets are Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks (INFO 205) and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206).

The information sheets set out ASIC’s views on the conduct and disclosure obligations of advisers under the Corporations Act and include a number of compliance tips on matters that ASIC is likely to look at when undertaking surveillance in this area.

Disclosure of risks
INFO 205 explains:

• the relevant conduct and disclosure obligations
• the risks that should be considered by the adviser and disclosed to the client when providing personal advice about SMSFs, including:
  ◦the lack of statutory compensation
  ◦the impact on insurance
  ◦access to complaints mechanisms
  ◦the appropriateness of different SMSF structures
  ◦trustee obligations and the time and skills necessary to operate an SMSF
  ◦trustee obligations to develop an investment strategy
  ◦the need to consider an exit strategy
• the additional information that must be included in a Statement of Advice (SOA).

Disclosure of costs
INFO 206 explains:

• the relevant conduct and disclosure obligations
• the need for advice on the cost-effectiveness of an SMSF – in particular, if the starting balance is below $200,000
• the need for advice on the costs of setting up, operating and winding up an SMSF
• the need for advice on the continued suitability of an SMSF for the client.