ASIC commences civil penalty proceedings against Squirrel Superannuation Services

On 23 December 2020, ASIC commenced civil penalty proceedings in the Federal Court against Squirrel Superannuation Services Pty Ltd (Squirrel) for false or misleading representations.

Squirrel is a financial technology company that holds an Australian financial services licence (AFSL). ASIC alleges that from around January 2015, Squirrel marketed and sold services helping customers establish and operate self-managed superannuation funds (SMSF) to purchase established residential property.

In March 2015, Squirrel first published and distributed a brochure headed ‘How buying established residential property can super charge your superannuation?’. ASIC alleges that between around March 2015 and July 2018, Squirrel provided the brochure to thousands of members of the public by email and distributed hard copies at a seminar held on 28 April 2015.

ASIC alleges Squirrel, in its brochure, made misleading representations that:

• ‘… residential property in metropolitan locations doubles in value every 7-10 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.

Read the full article here.