An industry body representing self-managed super funds (SMSFs) has rejected the idea of the sector being regulated by the Australian Prudential Regulation Authority (APRA), claiming the current framework is sufficient.
A recent survey by Money Management's sister publication Super Review, which was conducted at the Association of Superannuation Funds Australia (ASFA) Conference in Perth last month, found 75.5 per cent of respondents believed there should be a single regulator — APRA — for all types of super funds, and 74.4 per cent also believed that SMSFs were being inappropriately regulated.
Furthermore, nearly all participants of a Super Review roundtable, which was also conducted during the ASFA conference, concluded that it would be inappropriate to leave SMSFs under the oversight of the Australian Taxation Office (ATO) and separate from other super funds.
However, the SMSF Professionals' Association of Australia (SPAA) has deemed the calls "wilfully ignorant" of how the superannuation sector works.
SPAA chief executive officer Andrea Slattery said APRA's mandate under the legislation was to regulate funds solely on a prudential basis, to ensure trustees who are removed from members had robust systems in place to protect the interests of those members.
"This differs to SMSFs that have a more detailed and technical oversight to ensure the amounts being accumulated for members is directed to the sole purpose of building retirement savings," Slattery said.
"As the Wallis report recognised, small funds, where the fund member and trustee typically overlap, require a unique approach to achieve the same regulatory outcome as the larger publicly available funds. This is the same as the Corporations legislation where there are different requirements for public and private companies."
Allowing APRA to apply prudential principles to SMSFs would result in significant changes in non-compliance because prudential supervision is general and broad based, Slattery said.
This only works where large funds are involved due to their magnitude and scale of operation, she added.
"It also ignores the fact that the current regulator, the ATO, is one of the premier government agencies that competently operates in a high volume processing environment," Slattery said.
"When you consider there are more than half a million SMSFs, then that's exactly the type of agency that's required for SMSFs."
