The SMSF Professionals’ Association of Australia (SPAA) has voiced strong opposition to permitting the prudential regulator to apply prudential principles to the SMSF sector.
The move for the Australian Prudential Regulation Authority (APRA) to regulate SMSFs was “wilfully ignorant” of how the sector operated, SPAA said.
“The simple fact is APRA’s mandate under the Superannuation Industry (Supervision) legislation is to regulate funds solely on a prudential basis,” SPAA chief executive Andrea Slattery said.
“The reason for this level of control is to ensure trustees who are removed from fund members have substantial and robust systems in place to protect those members’ interests.
“This differs to SMSFs that have a more detailed and technical oversight to ensure the amounts being accumulated for members is directed to the sole purpose of building retirement savings.”
Slattery’s comments were made in response to a survey presented at the recent Association of Superannuation Funds of Australia conference that revealed 75.5 per cent of respondents would prefer APRA to be the single regulator for all types of super funds.
The Wallis report recognised small funds, where the fund member and trustee typically overlapped, required a unique approach to achieve the same regulatory outcome as the larger publicly available funds, Slattery said.
“This is the same as the Corporations [Act] where there are different requirements for public and private companies,” she said, adding APRA’s influence on prudential principles in the SMSF sector would result in significant changes in non-compliance as prudential supervision was general and broad based.
“This only works when large funds are involved due to their magnitude and scale of operation.
“It also ignores the fact that the current regulator, the Australian Taxation Office, is one of the premier government agencies that competently operates in a high-volume processing environment – when you consider there are more than half a million SMSFs, that’s exactly the type of agency that’s required for SMSFs.”
