SMSF compensation scheme unnecessary

The self-managed superannuation fund (SMSF) sector should not have a compensation scheme imposed upon it but should remain self-reliant, with trustees and fund members taking responsibility for decisions made about the funds, according to the SMSF Professionals’ Association of Australia (SPAA). 

The statement follows and supports similar comments from the Assistant Treasurer, Senator Arthur Sinodinos, with SPAA remaining opposed to any form of compensation scheme for SMSFs. 

SPAA chief executive Andrea Slattery said the sector had a number of existing mechanisms under which it was possible to gain compensation for theft or fraud. A compensation scheme was contrary to the philosophy behind an SMSF and the way it was intended to be operated. 

“The guiding philosophy underpinning self-managed super is that trustees/members take responsibility for their own retirement income outcomes,” Slattery said. 

“By opting to go down the SMSF path, trustees/members have to appreciate that decisions rest with them - although they can get advice, either directly or indirectly, from specialist SMSF advisors.” 

Slattery said that should any compensation scheme be formed, it should be part of broader industry scheme whereby financial losses due to misconduct or insolvency of a product or service provider are compensated by a levy imposed on the particular industry sector in which the misconduct occurred. 

Slattery said SMSF fund members could access compensation arrangements via Personal Indemnity schemes, actions under Corporations law, banking and credit legislation, and via the courts and Financial Ombudsman. 

“Although these legal options are not foolproof, they do give trustees/members options when there are instances of fraud or theft; but then again, no current scheme is foolproof.”