Regulators uneasy over super leverage

One year after relaxing the ban on borrowing by superannuation funds, financial regulators are showing signs of changing their minds.

Nick Sherry, minister for superannuation and corporate law, posed a question at an industry conference yesterday: "Are the current investment rules sufficient to address the increasingly sophisticated financial investment instruments being marketed to SMSFs?"

Sherry was speaking at the conference of the Self-Managed Super Funds Professionals' Association of Australia and Treasury published his speech at its website.

"The recent debate concerning the use of instalment warrants shows that sophisticated financial investment instruments are increasingly being marketed to SMSFs," Sherry said.

"I also note that SMSFs had a high exposure to Westpoint, which raises risk and diversification issues."

Sherry said the government would "keep a close watch on the marketing of any sophisticated products to SMSFs."