Unlisted property industry a concern for SMSFs: ASIC

Self-Managed Superannuation Funds may be exposed to unlisted property schemes who fail to adequately disclose risks related with their products, the Australian Securities and Invesments Commission (ASIC) claims following a review of disclosure to investors by the industry.  

ASIC commissioner, Greg Tanzer, said the results of the review, which was part of a broader surveillance into the managed investment and superannuation sectors, found unlisted property schemes were failing to adequately disclose against benchmarks put in place to improve investors’ awareness of the risks related to investing in there products.  

“The results are disappointing especially when, at a time in the rise of self-managed superannuation funds, many Australians are looking to invest in real estate,” he said.   

“Property schemes have become popular investment vehicles for such people, but they do carry risks as well as opportunities.  

“When schemes aren’t adequately disclosing those risks, investors are put in a vulnerable position.”  

ASIC’s review found schemes’ responsible entities either failed to address certain benchmarks or did not provide enough information. They also failed to provide the information in a single location on their website and/or in a single designated document.  

“While we are disappointed at the quality of the disclosure against the ASIC benchmarks, it was helpful to observe that the levels of leverage in the sample we reviewed appeared manageable,” Tanzer said.  

ASIC revealed that one scheme withdrew its Product Disclosure Statement from the market as a direct result of the regulator’s surveillance, while three entities are set to be questioned about their disclosure.  

“Schemes need to address each and every disclosure element in each benchmark and disclosure principle fully,” Tanzer said. “Where we find entities haven’t satisfactorily addressed benchmarks or disclosure principles, we may consider taking enforcement action.  

“A consistent approach should be taken when disclosing information. Entities should maintain a single stand-alone document, available in print or in an electronic form that represents to investors communication efficiency and cost effectiveness.  

“ASIC will engage with the sector so that these issues are addressed.”