A prudential regulator like the Australian Prudential Regulation Authority (APRA) is not required for the SMSF sector, nor is it the role the Australian Taxation Office (ATO) is currently playing, according to a panel of industry experts.
“We have a prudential regulator looking after the APRA-regulated funds and we don’t need a prudential regulator to say to you, as an individual, how you need to behave,” Super IQ chief executive Andrew Bloore told delegates at the recent CPA Australia 2013 SMSF Conference and Expo.
“We need to have a compliance regulator to say that you must lodge your returns on time, you must do it to this standard, the fund must be audited, and you must do all of these things and if you do, it’ll be fine. But to stand a prudential regulator over that doesn’t make any sense.”
Former superannuation minister and newly appointed Ernst and Young senior superannuation adviser Nick Sherry said the current SMSF regulatory structure meant the ATO had to rely more heavily on the role of the auditors.
“The ATO is not a regulator of SMSFs. It’s a very different role to prudential regulation. The ATO is effectively dependent on the indirect oversight by the auditors of the fund,” Sherry told the conference.
“That’s a very, very different set up. Time and time again I see in the media the ATO is regulating the sector. Well they’re not. It’s almost an indirect supervisory role.”
According to Bloore, the SMSF space needed to be treated differently from a regulatory viewpoint than all other areas of superannuation.
“The sector is made up of people who are writing their own cheques knowingly about their own investments. These are not people who are putting their money in the hands of someone else, meaning that entity would need to have proper regulatory controls,” he said.
“When you put your money in the hands of someone else, you need to be able to expect the money is going to be properly looked after. When you’re doing it yourself, you have to take responsibility for your own actions.”