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Two prominent groups have slammed the Financial System Inquiry's recommendation to ban direct borrowing by self-managed super funds.
Ken Raiss, managing director of wealth advisory group Chan & Naylor, said the recommendation is "unhelpful and self-defeating" and ignores Australia's future retirement needs.
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"With Australia's welfare safety net already under severe strain, more Australians must be encouraged to prepare for an independent retirement, and being able to purchase and retain an asset that grows in value over the next 30 years within a prudently managed SMSF is an excellent way of achieving this outcome," he said.
"Moreover, the notion that an SMSF should not be able to borrow for investments like property, but that APRA-regulated funds can via geared managed funds, as proposed in the report, is a showcase in duplicity."
International law firm Gadens has also dismissed the Financial System Inquiry's recommendation.
"Banning the ability for SMSFs to use leverage to build wealth inside the fund is likely to be a disincentive to the establishment of SMSFs, resulting in reduced competition and associated downward pressure on fees," Gadens said.
