The corporate regulator has commenced civil penalty proceedings in the Federal Court against financial technology firm Squirrel Superannuation Services for false or misleading representations.
The Australian Securities and Investments Commission (ASIC) alleged that the firm’s self-managed superannuation fund (SMSF) brochure from March 2015 and July 2018 made misleading representations.
ASIC said the brochure was called ‘How buying established residential property can super charge your superannuation?’ and that Squirrel provided the brochure to thousands of members of the public by email and distributed hard copies at a seminar on 28 April, 2015.
ASIC also alleged that from around January 2015 Squirrel marketed and sold services helping customers establish and operate SMSFs to purchase established residential property.
The misleading representations ASIC alleged in the brochure included:
- ‘… residential property in metropolitan locations doubles in value every seven to 10 years and generates a rental return of around 4-5% per annum’;
- Using a deposit from an SMSF to purchase residential investment property could obtain certain average returns;
- There is a ‘remarkable’ difference in returns between investing in a regular superannuation fund (7%) and using an SMSF that purchased residential property (14%); and
- The costs of managing an investment property through an SMSF are ‘surprisingly low’ compared with using a financial planner to select a series of managed investment funds.
ASIC said it was seeking declarations, pecuniary penalties and cost orders against Squirrel.