Use this guide to understand your compliance responsibilities when assisting trustees of self-managed superannuation funds (SMSFs) with lending, particularly where the loan is structured under a limited recourse borrowing arrangement (LRBA).
It outlines the regulatory environment, what brokers must and must not do, and the records you need to maintain.
What is SMSF lending?
Most lending to SMSFs occurs under a limited recourse borrowing arrangement (LRBA). These loans have strict legal and tax requirements overseen by the Australian Taxation Office (ATO).
Lenders generally require SMSF trustees to be company trustees rather than individuals. Because the borrower is a corporate trustee and not a natural person, SMSF loans are not covered by the National Consumer Credit Protection (NCCP) Act.
Your obligations as a broker
Even though NCCP does not apply, you still have important compliance responsibilities when dealing with SMSF trustees:
Maintain clear and complete records of your interactions and the information shared
Comply with privacy obligations when handling trustee information
Follow the lender’s SMSF and LRBA requirements
Avoid providing legal, taxation, or financial advice unless you are qualified and licensed to do so
Important: Lenders typically require SMSF trustees to obtain independent legal, taxation, and financial advice before proceeding with an LRBA.
You must not provide this advice unless you hold an Australian Financial Services Licence (AFSL) or other appropriate authorisation.
Advice outside of credit assistance is often excluded from brokers’ professional indemnity (PI) insurance.
Managing client expectations
When approached by an SMSF trustee seeking finance:
Clarify your role as a credit assistance provider, not a legal or financial adviser
Encourage trustees to obtain independent specialist advice early
Explain that lenders may require evidence of this advice before approving the loan
Note: Clear communication and accurate record keeping help reduce disputes, complaints, and post-settlement reviews.
Record keeping requirements
For all SMSF lending assistance, ensure your file includes:
Notes on discussions with the trustee
Documents provided or referenced
Details of any disclaimers or boundaries around the advice you can provide
Any lender SMSF requirements you explained to the trustee
Evidence, where provided to you, that the trustee has obtained independent advice
Need help?
If you need help understanding your compliance obligations for SMSF lending, contact your Compliance Support Manager or email [email protected]