The SMSF Association has told the federal government denying access to the Compensation Scheme of Last Resort (CSLR) or maintaining it via the payment of a special levy was wrong and blamed victims of poor products or advice.
The industry body made the claim in its submission to Treasury in regards to reform options to support the ongoing sustainability of the CSLR, saying it rejected the entire special levy model put forward by the government and claiming it would entrench it as an ongoing standard levy for the financial advice subsector.
“We strongly reject the proposals in the consultation paper that purport to deny SMSF investors access to the CSLR or predicating that access on payment of a CSLR levy,” the submission said.
“This proposal is not only nonsensical, but also morally wrong and in any other environment would likely be labelled victim-blaming.
“It is important to remember that members of SMSFs are consumers, retail investors who obtained licensed financial advice and suffered loss because of poor advice or product failure.
“They should not be forced to pay an additional levy to preserve access to a statutory compensation scheme. Nor should they be excluded from protection because they chose to hold their retirement savings through an SMSF.”
The submission pointed out the Australian Consumer Law prohibited requiring consumers to pay for rights that were already provided under statute and the Australian Consumer and Competition Commission (ACCC) has emphasised statutory consumer rights are automatic and cannot be replaced, restricted or sold back to consumers through additional charges.
“We therefore question if requiring a consumer to pay for the right to access the CSLR because they invested their retirement savings through an SMSF could be characterised as requiring payment for a right the consumer is already entitled to under statute,” it stated.
“If so, this proposal would be in direct conflict with the stance of the ACCC, being the independent statutory authority to enforce Australia’s competition, fair trading and, importantly, consumer protection laws.”
The association told selfmanagedsuper chief executive Peter Burgess met with Assistant Treasurer and Minister for Financial Services Daniel Mulino late last week to discuss the CSLR funding proposals, as well as those related to enhancing consumer protection in the superannuation system and curbing lead generation activity.
At the roundtable meeting, Burgess stated reforms should be directed at the source of harm and called for the inclusion of the managed investment scheme sector as a subsector that funds the CSLR levy given its material role in large-scale consumer losses.
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