SMSF trustees are uneasy with their personal financial information being sent offshore by accountants and advisers, a new survey conducted by Superfund Wholesale has found.
The data revealed overall adverse attitudes, with 70 per cent of trustee respondents revealing they were uncomfortable with their personal financial records being processed and stored offshore, as well as having their financial information accessed by unknown entities overseas, particularly when it came to privacy and security.
Ninety-seven per cent believed offshoring was not secure, according to the survey.
Trustees said they did not believe either businesses or consumers benefited from financial data being sent offshore.
Furthermore, the survey found 93 per cent of respondents “condemned the practice of accountants sending work to offshore suppliers”, expressing a negative view on the industry practice.
“An overwhelming majority, 95 per cent, of SMSF trustees surveyed said if they were advised their personal financial information was going to be sent offshore, they would reconsider the services offered,” the survey said.
“Overall, 84 per cent of respondents were extremely or very likely to switch accountants or advisers if they started sending their personal financial information offshore, and stated that they would rather keep their personal financial data in Australia than receive a fee discount and go offshore.”
Commenting on the findings, Superfund Wholesale director Kris Kitto said: “The SMSF trustees we surveyed believe that as soon as their personal financial information goes overseas, they lose control and the security of their data is significantly diminished.
“The perception of clients is that outsourcing their accounting work offshore is not secure – and perception is king. “Outsourcing offshore can be significantly more complex compared to a business with all data stored locally.
“Having the entirety of a client’s SMSF work conducted in Australia is more efficient when it comes to delivery, producing better results with less friction; pricing is a ‘hygiene’ factor only – it is only one part of the value equation.”
When asked about government involvement, the majority of respondents agreed government agencies should put more controls and enforcement around personal financial information being sent offshore.
As an example, accountants and advisers could have the same provisions as the new food labelling requirements being introduced by the federal government to make it clearer who was providing the service and handling their personal financial information, the survey said.
Superfund Wholesale revealed it had experienced a surge in inquiries from advisers, institutions and clients regarding offshoring.
About 80 per cent of recent calls received from professionals were due to inferior service and the need for rework due to communication breakdowns and high staff turnover at offshore providers, Kitto said.
The recent global Petya and WannaCry ransomware attacks also sparked questions from SMSF trustees about the security of personal financial data.
“There has been a rise in Australian accounting and advice businesses outsourcing parts of their operations to offshore partners,” Kitto noted.
“Although outsourcing may be warranted for certain tasks, when it comes to SMSFs it is unnecessary.
“The ATO and the professional accounting bodies require accountants to inform clients when their work is being sent overseas.
“However, clients are often oblivious to this practice as disclosures are buried deep in the fine print of the engagement letter or agreement.”