GLOBAL SUB-PRIME CRISIS

BANKILEAKS

Click on our Secret Library of Evidence ------>

    BANKILEAKS Secret Library

Loan Application Forms (LAF's)  

    Bank Emails to Brokers  

    Then Click on 'VIEW NOTEBOOK'

Join us on facebook
 

facebook3           facebook2 

BFCSA
MORTGAGE
DISTRESS SOS

What BFCSA Does...

BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

Visitors

Articles View Hits
630447

Whistleblowers' Corner!

To all mortgage brokers, BDMs and loan approval officers! 
Pls Call Denise: 0401 642 344 

"Confidentiality is assured."

Cartoon Corner

Lighten your load today and "Laugh all the way to the bank!"

Denise Brailey

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

Click on the Cluster Map.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Login
    Login Login form

BFCSA: Coalition says 'NO' to ban on loan borrowing by SMSFs

Posted by on in ROYAL COMMISSION URGENT
  • Font size: Larger Smaller
  • Hits: 197
  • 0 Comments
  • Print

Coalition says 'no' to ban on borrowing by SMSFs

Australian Financial Review Mar 22, 2019 5.18pm

Joanna Mather

 

The Coalition has recommitted to allowing self-managed superannuation funds to borrow for property despite warnings from regulators that the real estate correction could wipe out the nest eggs of some investors.

A new report by the Council of Financial Regulators and Australian Tax Office raises concerns about limited resource [sic; it’s “recourse” –RJB] borrowing arrangements (LBRAs) by SMSFs, especially where an asset such as the family home is used as a guarantee.

“LRBAs can represent a significant risk to some individuals’ retirement savings, particularly where they have low-balance SMSFs with high asset concentration and or personal guarantees,” the report says.

“As the majority of LRBAs are used to purchase real property, a property market correction could post a significant risk, in particular where a personal guarantee is involved.”

Responding to the report, the government said on Friday that it was satisfied SMSFs had low levels of leveraging overall and borrowing should be allowed to continue. Most major lenders have already exited the market.

Labor, which has pledged to ban LRBAs by SMSFs, accused the government of playing down the risks to the financial system and individuals.

“The report is clear that regulators' preferred option is to no longer allow limited recourse borrowing by SMSFs,” shadow treasurer Chris Bowen said.

The report says a blanket ban would reduce risks to both the stability of the financial system and individual retirement savings. But it would limit the investment choices available to SMSFs.

A more targeted approach would to be set a maximum loan-to-value ratio or require investments be spread more widely than a single piece of real estate. But this would introduce further complexity to super laws and could be difficult to implement.

“Where the regulators’ preferred option to remove the exception to allow LBRAs is not accepted, further monitoring to track the future growth of leverage and identified risks within the SMSF environment is recommended,” the report says.

“A further report to government in three years would provide further analysis of the ATO’s enhanced ... data collection and the impact of major banks’ withdrawing from lending to SMSFs.”

The total estimated borrowings, including LRBAs, by SMSFs as at June 2018 was $22 billion, representing 2.9 per cent of $750 billion total SMSF assets, the report says. However, the value of assets held under LRBAs has been growing rapidly and is now estimated at 5.2 per cent compared to 1.8 per cent in 2013.

“Given the high purchase price of real property, this asset class often makes up a large proportion of a SMSFs portfolio – leading to a high level of asset concentration,” the report says.

“As borrowing can magnify losses as well as gains, allocating a large proportion of money to a single asset class or a single asset can endanger a member’s retirement savings, and depending on the age of the member, there may be little opportunity to recoup losses.”

 

Last modified on
Rate this blog entry:
0

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Sunday, 15 September 2019