Prudential supervision of SMSFs is unnecessary as the current regulatory approach is appropriate and working well, the SMSF Professionals’ Association of Australia (SPAA) has said.
The statement was made as part of the association’s submission to the Financial System Inquiry.
SPAA said it believed the existing compliance-based regulation for SMSFs fitted well with the nature of SMSFs, SPAA technical and policy senior manager Jordan George said.
“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,” George said today.
“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 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.”
In addition, he said with SMSF trustees in control of their own retirement savings, there was no need for regulatory oversight of how they managed their savings.
“This flies in the face of the idea that SMSF trustees are responsible for themselves,” he said.
“We were happy to see that the Treasury, the government’s leading economic department, supported the current SMSF regulatory approach in their Financial System Inquiry submission and also thought there was no need to prudentially regulate SMSFs.
“The SPAA Financial System Inquiry 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.”
SPAA’s submission strongly supported the ATO as the regulator of SMSFs.
