The Association of Superannuation Funds of Australia (ASFA) has recommended SMSFs be excluded from the special levies being deployed to fill the funding shortfall for the Compensation Scheme of Last Resort (CSLR).
The representative body for Australian Prudential Regulation Authority (APRA)-regulated superannuation funds made the call in its submission to Treasury’s consultation on reform options to support the ongoing sustainability of the CSLR.
ASFA criticised special levies being applied to financial services sub-sectors not connected to breaches, noting they were intended only as backstop funding, and rejected any levy being placed on any part of the superannuation sector, but added if that occurred, it had to be done in a uniform way.
“Members of APRA-regulated funds are effectively ineligible to claim from – and therefore derive no benefit from – the CSLR,” it said.
“Our strong view is that the APRA-regulated superannuation sub-sector should also be excluded from any obligation to fund the CSLR via special levy.
“Consistent with this, ASFA is of the view SMSFs should be excluded from eligibility to claim under the CSLR and also excluded from any requirement to contribute to its funding via a special levy.
“In the event the government determines to proceed with a funding model for the CSLR with the APRA-regulated superannuation sub-sector in scope for special levy purposes, we consider that SMSFs should similarly be brought within scope.”
The association added it did not make the recommendation in isolation and called for broader consumer protection to reduce losses incurred by SMSFs.
“This might involve strengthening aspects of the advice process when a financial adviser recommends establishment of an SMSF and – of particular importance for consumers who choose not to utilise a financial adviser – expanding the scope of the ATO’s current ‘trustee declaration’ to include not only an acknowledgment of relevant regulatory obligations, but also consequences flowing from their decision to invest via an SMSF,” it said.
“This should specifically include acknowledgement that in establishing or joining an SMSF, the individual is aware they will not have access to the CSLR.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason