- The Australian superannuation system is getting more complex.
- There are fears the banking inquiry will result in additional regulations.
- The National SMSF Conference will offer the chance for advisers to increase their skills.
With the spotlight now turned on the finance sector, its critical accountants and advisers have a solid working knowledge of Australia’s superannuation system. This year has brought even more complexity to the sector and the message from the community is that the industry has to lift its game.
This has been the first full year of implementation for the major reforms of 2017, with enhanced strategies to help navigate what is already a complex system. Specifically, the reduction in contribution caps and other restrictions means clients are now more reliant on advice to successfully navigate the maze of provisions and avoid any nasty surprises.
The fifth round of hearings at the banking royal commission, as reported in Thomson Reuters’ tax and superannuation news services, dealt a sharp blow to the superannuation industry. The commission heard evidence about fees-for-no-service and conflicts of interests that made it difficult for some trustees to ensure they always acted in the best interests of members. Though, interestingly, responses to the submissions on the alleged breaches under the SIS Act and Corporations Act challenged the commission’s findings, claiming that the submissions did not grapple with the content of the best interests duty under s 52(2)(c) of the SIS Act in the particular circumstances. As practitioners are aware, these laws are difficult to interpret and, as Michelle Levy of Allens Linklaters observed, some “have never, or rarely, been considered in court.”
Even the regulators, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), were not spared the royal commission’s attention, which questioned their effectiveness.
Self-managed superannuation funds (SMSFs), while not in the scope of the commission’s investigation, were dragged into the inquiry when the hearings focused on financial advice and identified cases of inappropriate advice to establish SMSFs. They were served another dose of criticism in an ASIC report that questioned the quality of advice. All of this has heightened concern that further reforms may be coming, threatening the borrowing rules. Treasury has also warned that any structural separation of vertically integrated financial firms would be “complex and disruptive, and could have unintended consequences”.
This sets up a dynamic arena for discussion and debate at the upcoming National SMSF Conference, of which Thomson Reuters is a proud sponsor. Regardless of the outcomes of the conference and the year, practitioners would be best served by an end-to-end solution for all stages in the SMSF lifecycle to ensure they are getting the very best advice for their clients.