The SMSF Association has called on the federal government to tweak the existing policy aimed at preventing elder abuse instead of completely overhauling it.
The industry body’s stance comes in response to the Australian Law Reform Commission’s request for comments in regard to the policy recommendations made in its elder abuse discussion paper.
“We are not convinced that additional and stronger legislation will result in increased protections against elder financial abuse,” SMSF Association head of policy Jordan George said.
“Rather, we suggest that education for trustees and advisers on planning for the loss of capacity is the first step to reducing the risk of elder abuse occurring in the SMSF sector.”
George said the association preferred addressing the problem of elder abuse through education as a step-by-step legislative prescriptive approach would be unnecessary and exhaustive with no certainty of having the issues raised in the paper resolved.
However, he pointed out the professional body believed SMSF trustees and their advisers should give the issue more careful consideration and preparation to manage it.
As such, he said the association is in favour of amending the Superannuation Industry (Supervision) (SIS) Regulations to direct trustees to deal with the matter.
“Accordingly, the association proposes that the SIS Regulation 4.09 is amended to include that the trustees of the fund should formulate and review regularly the consideration and planning of the loss of capacity and SMSF exit strategy as part of their investment strategy,” he said.
“Our proposed amendment is similar to the recent addition to the SIS regulation 4.09 (2)(e) that requires trustees to consider whether they hold insurance.
“This has had great success in putting insurance to the front of every trustee’s mind and will have the same effect with estate and succession planning.
“Furthermore, it then becomes a legal requirement that trustees consider estate planning and this becomes part of the audit standards that SMSF auditors must see evidence of when auditing funds each year.”
He nominated the implementation of binding death benefit nominations (BDBN) as another area in need of education and awareness with more focus on the legal aspects of these instruments.
“The association would be supportive of a proposal that refuses an interested party from witnessing a BDBN,” he said.
In addition, he said the association believed an individual appointed under a power of attorney should not be able to put a BDBN in place or renew one unless specifically authorised to do so by that power of attorney.
A similar rule should be applicable to reversionary pensions, he added.