SMSF regulatory settings working well, says SPAA

The current approach to regulating self managed superannuation funds (SMSFs) is appropriate and working well according to the SMSF Professionals’ Association of Australia (SPAA) submission to the Financial System Inquiry (FSI).

SPAA Senior Manager, Technical and Policy, Jordan George, said SPAA thought that the existing compliance based regulation for SMSFs is working well and fits well with the nature of SMSFs.

“There have been calls for SMSFs to be prudentially regulated or to be regulated as a financial product in addition to the compliance based regulation that the Australian Taxation Office (ATO) already undertakes in regards to SMSFs.

“SPAA does not support the prudential regulation of SMSFs because it is unsuitable for the nature of SMSFs where trustees are required to manage their own retirement savings.

“Prudential regulation is appropriate where money is being managed on behalf of another person that has little ability to influence the trustee responsible for managing their retirement savings.

“With SMSF trustees in control of their own retirement savings, there is no need for regulatory oversight of how they manage their savings. This flies in the face of the idea that SMSF trustees are responsible for themselves.

“We were happy to see that the Treasury, the Government’s leading economic department, supported the current SMSF regulatory approach in their FSI submission and also thought there was no need to prudentially regulate SMSFs.

“The SPAA FSI submission also acknowledged that the ATO’s SMSF regulatory activities have been effective to the extent that the vast majority of SMSF trustees are complying with the taxation and superannuation laws. The SPAA submission strongly supports the ATO remaining as the regulator of SMSFs,” Mr George said.