The current approach to regulating self-managed superannuation funds (SMSFs) is appropriate and working well, according to a submission made to the Financial System Inquiry (FSI) by the SMSF Professionals’ Association of Australia (SPAA).
In particular, Jordan George, senior manager, technical and policy for SPAA, said that the existing compliance-based regulation for SMSFs was working well and fitted well with the nature of SMSFs.
“There have been calls for SMSFs to be prudentially regulated or to be regulated as a financial product in addition to the compliance-based regulation that the Australian Taxation Office (ATO) already undertakes in regards to SMSFs,” he said.
“SPAA does not support the prudential regulation of SMSFs because it is unsuitable for the nature of SMSFs where trustees are required to manage their own retirement savings.”
According to George, prudential regulation was appropriate where money was being managed on behalf of another person who had little ability to influence the trustee responsible for managing their retirement savings.
“With SMSF trustees in control of their own retirement savings, there is no need for regulatory oversight of how they manage their savings,” he said. “This flies in the face of the idea that SMSF trustees are responsible for themselves.
“We were happy to see that the Treasury, the Government’s leading economic department, supported the current SMSF regulatory approach in their FSI submission and also thought there was no need to prudentially regulate SMSFs.”
George said that the SPAA FSI submission also acknowledged that the ATO’s SMSF regulatory activities had been effective to the extent that the vast majority of SMSF trustees were complying with the taxation and superannuation laws.
“The SPAA submission strongly supports the ATO remaining as the regulator of SMSFs,” he concluded.
Originally published by SMSF Essentials.
