The notion that self-managed super fund (SMSF) trustees should have a so-called competency test is elitist, according to SMSF Professionals’ Association of Australia (SPAA) chief executive officer Andrea Slattery.
The competency test was suggested by the visiting European financial literacy specialist Robert Holzmann, who echoed the industry super funds’ calls for basic ongoing educational requirements for SMSF trustees.
In their joint submission to the Australian Securities and Investments Commission, the Australian Institute of Superannuation Trustees (AIST) and Industry Super Australia (ISA) said SMSF trustees should be required to demonstrate a basic understanding of the role required of them and a reasonable capacity to fulfil that role.
“A basic and ongoing educational commitment is required for any trustee to be in a position to claim that they are a fit and proper person to undertake the duties of a trustee,” the submission read.
“The rapid growth in the number of SMSFs, combined with a considerably older and ageing demographic, [means] a basic ongoing educational requirement should be seriously considered.”
Such a program, according to AIST and ISA, would help SMSF trustees refresh and keep abreast of changes to relevant law.
However, Slattery pointed out that anyone running a business, including trustees of trusts who are responsible for unrelated investors’ money, does not require mandated training to do their job, nor there is any requirement for them to have formal academic qualifications.
“At least with an SMSF, the trustees are responsible for their own money,” Slattery said.
“Perhaps the simple reason SMSFs have performed on par with the APRA-regulated funds is the simple fact it is their money and they have a greater interest in ensuring it is invested wisely and therefore more conservatively to ensure real gains.”
In their submissions to the Cooper Review, both AIST and ISA called for mandatory training for fund trustees regardless of the type of fund they look after. However, when the Cooper Review handed down its final report in 2010, it specifically ruled out formal training for SMSF trustees.
“People need to be reminded that Cooper said the SMSF sector had been performing well and was well managed and there has been no evidence since to suggest the situation is any different three years later,” Slattery said.