SMSF borrowing ban risks missing the real problem

• Proposed SMSF changes highlight ripple effect of the Government’s tax reform agenda
• CPA Australia calls for stronger regulation of lead generators
• Concerns about unintended impacts on equity and investment choice

CPA Australia says proposed changes to self-managed superannuation fund (SMSF) borrowing rules risk overlooking the real driver of consumer harm, following reports the Government has agreed to ban SMSFs from borrowing to invest in residential property as part of budget negotiations.

The Government will move to ban new SMSF borrowing for residential property purchases after reaching an agreement with the Greens, with changes expected to apply prospectively and take effect shortly after legislation passes.

CPA Australia Superannuation Lead Richard Webb said the shift raises broader concerns about the direction and unintended consequences of the current reform package.

“These proposed changes highlight the ripple effects of the Government’s broader tax reform agenda,” Mr Webb said.

“While targeting SMSF borrowing may appear to address risks at the surface, it does not tackle where much of the real harm originates – upstream in unregulated lead generation and high-pressure sales practices.”

CPA Australia said that, as outlined in its recent submission to Treasury (as part of the Joint Associations Working Group with CAANZ and IPA), issues with the anti-hawking regime – including the personal advice exemption – should be considered in the broader context of lead generation activity.

“Consumer harm often begins well before formal financial advice is provided,” Mr Webb said.

“Unregulated lead generators can influence or direct consumers toward particular products or strategies without being subject to the same licensing, conduct and accountability obligations as financial advisers.”

“Simply tightening or removing the personal advice exemption risks treating the symptoms rather than addressing the root cause.”

CPA Australia is calling for stronger oversight of lead generation activity, including bringing those who materially influence consumer decisions within the financial services licensing framework.

“If policymakers want to reduce harm, the focus should be on ensuring anyone who meaningfully shapes financial decisions is appropriately regulated and accountable,” Mr Webb said.

Mr Webb said the proposed SMSF borrowing changes may also have unintended consequences for investment choice and retirement planning.

“The initial policy direction indicated superannuation would be largely insulated from these tax changes, but what we are now seeing is a shift that could effectively limit investment choice for SMSF trustees,” he said.

“In practice, this would narrow access to residential property investment within super to Australians with significantly larger balances, potentially creating equity concerns across the system.”

CPA Australia said the full implications of the reforms – including interactions with broader tax changes and housing policy objectives – should be carefully assessed before being legislated.

“These are significant structural changes,” Mr Webb said.

“They should be considered on their merits, with a clear focus on consumer protection, system integrity and fairness – not traded off in the context of broader budget negotiations.”

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Adrienne Biscontin
External Affairs Lead
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