A recent poll of financial advisers has indicated their clients who are trustees have been slow in specifically planning and taking any required course of action to ensure compliance with the best financial interest duty imposed on them by the Your Future, Your Super legislation.
When asked during a technical webinar hosted by Accurium whether their clients are currently documenting their considerations in adhering with the best financial interest duty, 58 per cent of advisers indicated the SMSF trustees they are servicing have not thought about it.
Another 38 per cent of webinar delegates revealed their clients are not documenting their best financial interest procedures, while only 4 per cent said their clients were already preparing documentation regarding the obligation.
Accurium SMSF technical services manager Melanie Dunn noted the poll results may not be as serious as they seem on face value as proof of adhering to the best financial interest duty may be achieved through documentation showing the fund is satisfying the broader compliance requirements imposed upon it.
Accurium head of education Mark Ellem suggested the issue should prompt advisers and their SMSF clients to consider their practices towards compliance with the sole purpose test.
“That’s probably one that’s not thought of a lot, but if we keep looking at what’s coming out, such as the Aussie Golfa decision impact statement and the recent Marchant case, there’s more and more focus on the sole purpose [test] as well,” Ellem noted.
“So in addition to thinking about how am I documenting consideration of the best financial interest duty, [consideration needs to also be given to] what [trustees are] doing about documenting their compliance with the sole purpose [test].”
According to Ellem, this would involve consideration as to whether or not the sole purpose test is front of mind when the SMSF makes an investment.