The SMSF Association is continuing to lobby for the exclusion of the sector in the Compensation Scheme of Last Resort (CSLR) and has suggested it might be time for the government to look at contributing to the funding of the body.
SMSF Association chief executive Peter Burgess confirmed the industry body has had an active role in reporting suspect schemes and lead generators to the Australian Securities and Investments Commission (ASIC) over the past two years.
“[However], once we [report], it’s out of our hands, it’s over to ASIC to do their job and to take action and because of that I think there’s an argument here that the government should be contributing to the cost of these claims and these failures that have happened on their watch,” Burgess said.
During meetings with Treasury in Canberra last week, the industry body outlined the impracticalities of the ‘opt-in or opt-out’ proposal for SMSFs with regard to the CSLR.
In addition, Burgess is also set to attend another roundtable hosted by Minister for Financial Services Daniel Mulino on Friday where he will continue to lobby for the exclusion of SMSFs in the scheme.
“We’ve got some very strong arguments against the SMSF sector being asked to pay a levy,” he indicated.
“If there is misconduct and [SMSF members] suffer financial loss, and there’s an unpaid AFCA (Australian Financial Complaints Authority) determination, well then they should have a right to claim against the scheme, like any other private investor, and they shouldn’t be ruled out just because they’re a member of a self-managed super fund that didn’t pay a levy.”
Also discussed last Thursday in Canberra was super switching and the shortcomings of cooling off periods for rollovers, which the association suggested would not necessarily protect people from scammers.
During the visit, Burgess presented research conducted by his organisation that found about 80 per cent of small-balance rollovers from industry funds were directed into existing SMSFs with balances in excess of $200,000.
“That was, we thought, quite powerful, being able to show that it’s not necessarily risky or poor decision-making, it’s actually deliberate decision-making on behalf of the trustees,” he noted.
