The peak body for the self-managed superannuation fund (SMSF) sector is willing to hold further discussions with government regarding changes to Australia’s compensation system, particularly if the result benefits both SMSF and non-SMSF investors.
SMSF Professionals’ Association of Australia (SPAA) chief executive Andrea Slattery told InvestorDaily that despite the association long advocating for change, in light of the Minister for Financial Services, Bill Shorten, calling for an “indication” from the sector over possible amendments, SPAA is agreeable to further talks.
“There have been lots of discussions in relation to the SMSF sector and the way in which investors, generally, and SMSF members can be involved in recompense for fraudulent and theft activities,” Slattery said.
“There have been long discussions and SPAA’s recommendation has been consistent in the recommendation of a last result at the managed investment scheme (MIS) level.”
She said SPAA has had a view on the compensation proposal for the past few years that the compensation package should be levied at the managed investment scheme level.
“We don’t believe [with] Richard St John and the Trio [Capital] report that there should be no levy on the SMSF sector,” she said.
“To have a scheme at the SMSF level and for SMSF trustees is not appropriate.”
Slattery’s comments come in response to remarks made by Shorten to Australian news and current affairs program, The 7.30 Report, regarding the possible introduction of a levy system.
“I think that the SMSF sector needs to give us an indication in government that they are willing to have a levy system to compensation victims of crime like that which exists in the other style of superannuation funds which most Australians belong to,” he told the program.
“I think there are some decisions to be made in the SMSF sector, that if they feel that they want legitimately greater compensation when something goes wrong then we do need them to join the discussion about how you pay for it.”
Earlier this week, a Parliamentary Joint Committee released its final report to government regarding the collapse of Trio Capital (Trio). As part of the report, the committee dismissed the need for a levy on SMSFs, though suggested the examination of a compensation scheme for MIS could be another approach.
Meanwhile, in the wake of the Trio report, Townsends Business & Corporate Lawyers principal Peter Townsend said regulators and government do not fully understand the “potential” for another fraudulent MIS in the future.
“There has been no real change to rules making early detection and pre-emptive enforcement easier against flawed schemes or fraudulent management,” Townsend said.
“Awareness and action after the fact are swifter than earlier times but I can’t see evidence that early enforcement is materially tighter or more effective.”
