Superfund Wholesale’s survey of SMSF trustees revealed that 70% of respondents are uncomfortable with their financial records being stored offshore.
An even greater proportion (93%) expressed a negative view towards accountants sending work to offshore suppliers.
Almost all of the survey respondents (97%) held the belief that offshoring is not secure.
Concerns over privacy and security were reported as the key reasons for the adverse feelings towards such practices, in addition to the primary belief that neither businesses or consumers benefit from financial data being sent offshore.
As an SMSF administration provider, Superfund Wholesale has reported receiving a surge in enquiries from advisers and clients about offshoring practices.
According to the firm, around 80% of recent calls received from professionals were regarding poor service, communication breakdowns, and high staff turnover at offshore providers.
There were also numerous questions received about the security of personal financial data following the recent ‘Petya’ and ‘WannaCry’ ransomware attacks.
Most respondents said they want more government controls around personal information offshoring.
Superfund Wholesale suggested “accountants and advisers could have the same provisions as the new food labelling requirements being introduced by the Australian Government to make it clearer who is producing the service and handling their personal financial information”.
Director of Superfund Wholesale Kris Kitto said there’s been a rise in Australian accounting and advice businesses outsourcing parts of their operations.
“Although outsourcing may be warranted for certain tasks, when it comes to SMSFs it is unnecessary,” Kitto said.
“The ATO and the professional accounting bodies require accountants to inform clients when their work is being sent overseas.
“However, clients are often oblivious to this practice as disclosures are buried deep in the fine print of the engagement letter or agreement.”
Trustees likely to reconsider their services in response to data offshoring
The survey also revealed that 95% of SMSF trustees say they would reconsider their services if they were advised that their personal financial information was to be sent offshore.
Most respondents (84%) were ‘extremely likely’ or ‘very likely’ to switch accountants or advisers if they began sending their information offshore, even if that meant missing out on a discount to their fees.
“The SMSF trustees we surveyed believe that as soon as their personal financial information goes overseas, they lose control and the security of their data is significantly diminished,” Kitto said.
“The perception of clients is that outsourcing their accounting work offshore is not secure – and perception is king.
“Outsourcing offshore can be significantly more complex compared to a business with all data stored locally.
“Having the entirety of a client’s SMSF work conducted in Australia is more efficient when it comes to delivery, producing better results with less friction. Pricing is a ‘hygiene’ factor only – it is only one part of the value equation.”