Advisers can significantly aid their SMSF clients by knowing the recourse action available to them in the event of problems related to a rollover from a public offer fund being delayed, a sector strategist has said.
I Love SMSF founder Grant Abbott highlighted this point during his latest strategy webinar today, noting superannuation fund trustees had an obligation under section 52A of the Superannuation (Industry) Supervision (SIS) Act 1993 to act in the best interest of the beneficiaries and this applies to the expedient processing of a request to roll over member benefits into an SMSF.
In addition to this obligation, Abbott noted members had access to remediation should the rollover request be unreasonably delayed.
“Effectively, if they don’t release the monies as required under section 52A of the SIS Act and having regard to Dunstone v Irving, that resulted in an action under section 55(3) of the SIS Act to claim damages,” he noted.
“And they can be quite substantial damages if the potential investment the member could have had without the delay had appreciated quite substantially.”
Further, he suggested advisers also had another avenue of recourse via the newly created Australian Financial Complaints Authority.
“So again, if you’re having some tardiness or delay, and particularly now that SuperStream rollovers won’t be available for quite some time, [it would useful to keep this in mind],” he said.
His reminder was sparked by a recent incident where a member of a public offer fund submitted a rollover request and was hampered because the fund insisted the member talk to an adviser about the risks involved with running an SMSF. This course of action was considered mandatory despite the member having already provided the said fund with a complying certificate for the SMSF.
In Dunstone v Irving, the court found the plaintiff was entitled to a disputed portion of assets of the SMSF and due to the delay in delivering the benefits, and the investing opportunity costs associated with the delay, was subsequently awarded damages in the vicinity of $250,000.