Limited Recourse Borrowing Arrangements

Limited Recourse Borrowing Arrangements

Earlier this year we outlined the recommendations made by the Financial System Inquiry (FSI) in relation to limited recourse borrowing arrangements, which were that such arrangements should be prohibited (albeit existing arrangements should be maintained).

Government responds to Financial System Inquiry

Earlier this year we outlined the recommendations made by the Financial System Inquiry (FSI) in relation to limited recourse borrowing arrangements, which were that such arrangements should be prohibited (albeit existing arrangements should be maintained).  The rationale behind this recommendation was the prevention of the buildup of unnecessary risk in the superannuation system.

On 20 October 2015, the Government provided its response to the FSI.  The response was as follows:

“The Government does not agree with the Inquiry’s recommendation to prohibit limited recourse borrowing arrangements by superannuation funds.  While the Government notes that there are anecdotal concerns about limited recourse borrowing arrangements, at this time the Government does not consider the data sufficient to justify significant policy intervention.  The Government will however commission the Council of Financial Regulators and the Australian Taxation Office to monitor leverage and risk in the superannuation system and report back to the Government after three years.”

This means that the present arrangements will remain in place for a further three years (subject of course to a change in Government or policy).

The Ballantyne Law Group is well placed to assist in relation to all aspects of superannuation – please contact us now on (07) 5606 7332 to speak to us now.

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