APRA backs reversing legal burden of proof in super

The Australian Prudential Regulation Authority (APRA) has specifically backed reversing the legal onus of proof with respect to superannuation funds and the best financial interests duty.

In a submission to the Senate Economics Legislation Committee review of the Government’s controversial Your Future, Your Super legislation, APRA has clearly stated that the reversal of the evidentiary burden of proof will focus the minds of superannuation trustees.

“The reversal of the evidentiary burden of proof (which is part of the BFID measure) will also further focus trustees’ minds on the evidence they must have and the records they must keep to show they have acted in the best financial interests of members at all times,” the APRA submission said.

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The regulator’s position stands in stark contrast to that of plaintiff law firm, Maurice Blackburn which described the reversal of the burden of proof as “regulatory overreach”.

“This measure bolsters the requirements already introduced through SPS 515, building on penalty provisions recently introduced, which require trustees to ensure that their significant expenditure decisions are for the purposes of the sound and prudent management of its business operations and consistent with the best interests of beneficiaries,” the submission said.

APRA said in the submission that it was currently undertaking a broad review of trustee expenditure, looking at a range of different types of expenditure arrangements across all sectors of the superannuation industry.

“This review is considering the framework and decision-making process of boards pertaining to certain areas of expenditure, including a review of the metrics and approach to assessment of benefits to members,” it said.

“If we conclude that fund expenditure by a particular trustee may not be consistent with the best interests of members or the sole purpose test, appropriate supervisory and/or enforcement action will follow. We are also seeking to identify both areas of good practice and areas where there is room for improvement, and expect to inform industry about our findings on an aggregate basis within the next year.”

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Giddyup! Watch out ISF Trustees

About time. This was always a major focus for even small SMSF clients and yet the behemoths union funds could waste and gouge hundreds of millions of dollars from members with impunity.

The sooner we remove the political bias from union super and ideally remove unions and labor's tentacles from that ludicrously lucrative cash cow or rivers of gold, the better for the public and for our profession.

Last year, Trustees were required to adhere to APRA's GIF - Governance Investment Framework. It stopped very young superannuation clients from investing in Smaller Companies Funds, when they have small amounts invested and a 30 year time horizon to Preservation Age 60. So I each asked APRA and a platform Trustee, which takes legal precedence (a) APRA's GIF over Adviser's scaled advice (RG244) and FASEA Standard in longer term interests of the client or (b) Adviser's scaled advice (RG244) and FASEA Standard in longer term interests of the client over APRA's GIF? In this instance of Regulatory Conflict about which takes legal precedence, NO ANSWER was forthcoming from either APRA or Superannuation Trustee. ASIC should run this Test Case in the Federal Court because (1) regulations are not Law (2) Judges will not hand down a decision on regulations and (3) Judges should hand it back to Politicians to resolve regulatory conflict, wherein ASIC should advocate that in support of Financial Advisers who are responsible for advice in investment strategy to specific clients, but APRA is not responsible to specific members. ASIC avoids supporting Financial Planners like the plague but we have the obligation to manage this regulatory conflict hysteria. Not funny, is it?

Gold Coast Suns and Sydney Kings may need to find new sponsors!

What an abomination and perversion of the most basic elements of Public Policy, Western law, justice, and good governance. This has far wider implications than the ostensible good intentions promoted here.

“...The reversal of the evidentiary burden of proof (which is part of the BFID measure) will also further focus trustees’ minds on the evidence they must have and the records they must keep to show...".

SO WILL a mandatory "Trustee Transgression" Death Penalty, pouring molten lead into Board Member orifices, and chopping off hands for unaccountable, bureaucratically perceived infringements...

I am normally quite vociferous in expecting management rigor, competence and accountability, but this is yet another step in the accelerating slide into the ever mushrooming amount, poorly defined, and intrusive Political Totalitarianism generally, "Bureaucratic Totalitarianism" particularly, and ultimately, incrementally bringing on a Fascist State. Remember, "The road to Hell is paved with good intentions...".

There are an enormous number of well proven reasons that the "Burden of Proof" IS ON THE STATE, facilitated by its immense power and endless resources.

Imagine a huge, unaccountable, ideologically driven, ideologically staffed, effectively corrupt Government Regulatory Body with this added power. Perhaps even funded by the captive serfs it "regulates". Never. Not in Australia. Not under our Westminster system of Government. Unimaginable. Inconceivable. Not in our lifetime. Yeah, right.

This effectively makes all management "Guilty Until Proven Innocent", adjudicated by faceless, unaccountable bureaucrats, hidden behind layers of internally written rules and deliberately evasive obfuscation.

The only place I know of this existing situation [previously] was the Soviet Union and Communist Eastern Bloc.

Aside from anything else, THIS PROMOTES A LAZY, IGNORANT, UNTHINKING, IMPERIOUS BUREAUCRACY who only strive to demonstrate to their "Political Aristocrat" Masters how STRINGENT, RIGID, AND BLINDLY LOYAL they are - just like in "All The Best Totalitarian States" worldwide...

Let's not forget: "...IF WE CONCLUDE [my emphasis] that Fund expenditure by a particular Trustee may not be consistent with the best interests of members or the Sole Purpose test...".

Who died and made APRA God? Who "Concludes"?

Some pimple faced 24 year old Uni graduate with a Degree in "Diversity, Inclusion, and The Evils of Western Capitalism"? No need to demonstrate intent, negative results, Member detriment, and/or professional negligence "Beyond a reasonable doubt"? Just "Conclude"? Wait for the unintended consequences and careerist agendas to kick in...

BTW, ANYONE who has had contact with Government AT ALL LEVELS [including Local Councils], and can read Acts, Regulations, etc knows that there in ever expanding, ever more amorphous, ever more inflexible rewriting of the basic tenets of Western Justice, Law, and principles of democracy to create this type of heavy handed abuse in all aspects of our lives, starting with incentivising "Privacy Protected" "Anonymous Complaints" [aka Dorothy Dix "Secret Informants"], moving all the way up the chain to unilaterally imposed "No Appeal" "Deemed Penalties".

Behind the innocuous, honeyed phrases designed to lull you into agreement with an ostensibly laudable purpose, there is really only ONE ULTIMATE INTENT: to aggregate more power, unilateral control, and make politicians and bureaucrats less accountable. This ultimately engenders an "All stick, no carrot" dark, dystopian, stratified, caste based "Law of the Jungle" society.

Remember [and look for] the phrases like "Show Cause" [Guilty until proven innocent]; "A Reasonably Held Opinion" [Because I said so"]; "Proscribed Legislation" [Legislation which ostensibly can't be changed or repealed, even by Parliament], and so on.

"Democracy Dies in the Dark", and Government needs to be more competent, transparent, and accountable - not less.

These proposals are an abusive, lazy, perverted abomination, despite their ostensibly well intended purpose.

That is by far the the best comment I have ever read on this site, but the cancer is riddled throughout the body. It really is too late.

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