It has come to my attention that a financial adviser was recently permanently disqualified by ASIC for advising six SMSF clients to invest their superannuation in a specific financial product. ASIC found the adviser engaged in misleading or deceptive conduct by investing client funds for purposes other than those intended.This case highlights the importance of cooperation during audits.

Auditors often encounter resistance when requesting additional information to verify the existence and fair value of investments. In this instance, however, the accountant was very cooperative and transparent about the investment in question. For the past three years, I have issued contravention reports to funds where the existence or fair value of an investment could not be verified. Ultimately, after reviewing my report, the trustee understood the investment was a poor decision.

Here are some key takeaways from this real-world case:

• Always welcome and address auditors’ questions and requests for information. Our primary objective is to assist you in understanding the value and legitimacy of your investments.
• Never base financial decisions solely on someone’s recommendation. Conduct your own research and consult with other professionals regarding the investment.
• Exercise extreme caution if someone approaches you recommending the establishment of an SMSF and investment in their product. In my experience, such promoters are often motivated by a personal need for funds or may be attempting to defraud investors.

If you require further guidance on the red flags auditors look for in investments, please do not hesitate to contact me.

Below is the link from ASIC:

24-052MR Financial Adviser and director Shane Allan Rose permanently banned | ASIC