The Australian Securities and Investments Commission has issued a warning to super fund members to check the accreditation of people offering financial services before doing business with them.
The warning follows the conviction of a Melbourne man, Grant Ross, who pleaded guilty in the Melbourne Magistrates Court to operating a financial services business without a licence. He was fined $6000.
Ross operated a scheme that facilitated early release of superannuation funds through the creation of self-managed super funds.
The scheme was a “round robin”, where clients transferred their super funds into newly created SMSFs. The SMSFs loaned money to Ross’s company and then an amount, less a fee, was loaned by either Ross’s company or personally by Ross back to the trustee of the SMSF in their personal capacity.
Ross has never had an Australian Financial Services Licence or an Australian Credit Licence and has never been an authorised representative of a licensee.
The accreditation of financial services and credit providers can be checked on ASIC’s Professional Register, on the ASIC website.
Peter Kell, ASIC deputy chair, says: “Ross exposed his clients to potential legal and financial risk. Consumers are urged to deal only with licensed representatives of the financial services and credit industries.”
Early release of super funds is legal only in very limited circumstances. These include: cases of severe financial hardship, where the fund member has received Commonwealth benefits for 26 continuous weeks but is still unable to meet immediate living expenses; where the member suffers permanent or temporary incapacity; to pay for medical expenses if the member is seriously ill; and if there is a terminal medical condition.
According to ASIC’s MoneySmart website, early release scams sometimes result in the money being stolen.