“It is not a systemic issue,” continued Chesworth, noting that the sector had already been examined at the highest regulatory level, pointing to two reviews by the Council of Financial Regulators that had both concluded SMSF borrowing posed no systemic risk.
He added that the $25 billion in SMSF loan balances was secured against approximately $70 billion in assets – a figure that, if confirmed, would place the sector’s loan-to-value ratio well below mainstream residential lending benchmarks.
Chesworth estimated that roughly half of the $25 billion in SMSF borrowings relates to residential property, putting the residential component at around $12 billion to $13 billion – a rounding error in Australia’s multi-trillion-dollar residential mortgage market.
“It’s a behavioral issue, it’s not an SMSF issue,” said Chesworth. He pointed to unlicensed property promoters and marketing firms operating on the fringes of the superannuation sector, using social media to push property investments while collecting high commissions – activity he said had been fuelling concern among regulators without reflecting how licensed professionals operate within the SMSF lending space in the first place.
Another backtrack?
Labor risks outrage mounting even further outrage for what amounts to an added $50 million tax revenue, per the party’s own forecasts.
