The SMSF Association has highlighted the fact there is no complaint body for SMSFs and claims this situation can add further distress to victims of financial abuse as they must pursue the matter via the legal system to resolve any disputes of this nature.
To this end, the industry body recognised SMSFs are not covered by the Australian Financial Complaints Authority because they are a privately held vehicle, meaning members have no independent arbitrator to which they can turn.
“The only avenue available to aggrieved parties in any dispute, whether it’s a financial abuse situation or some other dispute amongst parties, if you can’t resolve it amongst yourselves, is to take the matter to court,” SMSF Association head of policy and advocacy Tracey Scotchbrook told selfmanagedsuper.
Even if a trustee wants to leave an SMSF, and the other trustees do not consent, they may need to go to court to have the situation resolved, Scotchbrook pointed out.
Further, it was acknowledged taking a matter to court is not cheap and is very difficult for somebody who may have been cut off from their financial lifelines in a situation of financial abuse.
“They don’t have the resources and they are needing a solution,” Scotchbrook said.
This issue was also raised by the Parliamentary Joint Committee on Corporations and Financial Services in its report from its financial abuse inquiry completed late last year.
The government is currently considering the report’s 61 recommendations in relation to financial abuse, including another review into how superannuation can be used specifically as an instrument in such cases.
In the report, committee chair Labor Senator Deborah O’Neill said: “Victims of financial abuse within self-managed superannuation funds face severe disadvantages as these funds are not covered by the Australian Financial Complaints Authority.”
