Trio Capital bailout, but SMSFs excluded

The Government will bail out over 5,300 superannuation fund members who were caught out over one of Australia’s biggest cases of investment fraud – the collapse of Trio Capital (formerly known as Astarra Asset Management).

Under the terms of the $55 million bailout package, which were announced yesterday, compensation will be limited to those investors who had invested in Trio Capital through an Australian Prudential Regulation Authority (APRA) regulated mainstream superannuation fund. It is expected that these investors will receive back all of their lost money.

However, in a blow to self-managed superannuation fund (SMSF) investors, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten (pictured), confirmed that the compensation package would not extend to ‘do-it-yourself’ investors, as these trustees had direct control of their investments whereas other investors invested through an APRA regulated fund, had no such direct control.

The compensation package falls under Section 23 of the Superannuation Industry (Supervision) Act, which provides financial assistance to certain funds that have suffered loss as a result of fraudulent conduct or theft. The SIS Act makes allowances for those funds that are regulated superannuation funds, other than an SMSF, at the time it suffers the loss.

Shorten was quoted as saying: “If people wish not to operate under those SMSF regulations, they’re free to become members of the APRA funds.”

It is estimated that about 690 SMSF and direct investors will not receive any compensation as a result of this Government package.

The funds will be recovered by way of a one-off levy on regulated superannuation funds.

For more information about the collapse of Trio Capital, click here.