SPAA opposes compensation for SMSFs

The SMSF Professionals’ Association of Australia (SPAA) remains steadfastly opposed to any form of compensation scheme for self managed super funds (SMSFs).

SPAA CEO Andrea Slattery was responding to a comment by the Assistant Treasurer, Senator Arthur Sinodinos, who said this superannuation sector needed to be “self-reliant” and trustees/members had to understand this as they had chosen to be responsible for their own decision making.

“On this issue and the issue of raising the standards of advice and competency, SPAA concurs with the Minister.

“The guiding philosophy underpinning self-managed super is that trustees/members take responsibility for their own retirement income outcomes.

“By opting to go down the SMSF path trustees/members have to appreciate that decisions rest with them, although they can get advice, either directly or indirectly, from Specialist SMSF advisors.”

Slattery said any compensation scheme should only be part of a broader financial services scheme where clients have suffered financial losses because of the misconduct or insolvency of a provider of a product or service, and that the compensation should be funded by a levy imposed on that industry sector where the misconduct occurred.

She added that it was a misconception that SMSFs were not entitled to compensation when fraud or theft occurred.

“This is incorrect. Although SMSFs don’t have access to compensation under the Superannuation Industry (Supervision) Act 1993 (SIS) Act that is available, at the Minister’s discretion and only where it is in the public’s best interest to approve compensation for APRA-regulated funds, there are other legal avenues that SMSFs can pursue.

“These include but are not limited to personal Indemnity schemes; actions under the Corporations law; action in the courts to obtain compensation for damages; the Financial Ombudsman; and the banking and credit legislation.

“Although these legal options are not foolproof, they do give trustees/members options when there are instances of fraud or theft; but then again, no current scheme is foolproof.”