Sent: 23-06-2011 11:05:57
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Mr Weaven's SMSF Comments
You have no doubt read about Garry Weaven's comments about coming after Self Managed Super Funds once the Future of Financial Advice reforms had dealt with financial adviser commissions.
One of his gripes is that SMSFs are not subject to the same supervision as APRA regulated super funds. This is true and has been Government policy for almost 20 years. It was in October 1992 that John Dawkins announced that funds with fewer than 4 members would not receive any prudential supervision.
The rationale for excluding such funds from this type of supervision was that there would be a direct link between members and trustees and given the size limitations on super funds everyone involved could look after themselves.
In the main the close linkage between trustees and members works well. The linkage fails when fraud or theft occurs and there have been a few documented cases about this.
I personally think that APRA do a pretty good job when it comes to looking after the large super funds. But even their vigilant prudential supervision will not guard against all fraud or theft.
I hope that Mr Weaven wants to achieve more out of the FoFA reforms than merely getting rid of adviser commissions.
If this is all it achieves it will have failed. Retail financial services in Australia is based on a classic three tier distribution model of manufacturers, wholesalers and retailers. Each layer of this model contains remuneration conflicts. FoFA needs to address these conflicts.
I don't believe FoFA will stop another Storm Financial or Westpoint or other similar sagas.
Finally in relation to Mr Weaven's comments it is worth pointing out that fees in the retail super sector have been decreasing. Industry funds have been pushing their low fee model. At the same time, most people have realised that SMSFs are also a low fee model.
I don't think Industry Funds would have forced the retail super sector to reduce their fees unless SMSFs had been pushing for lower fees as well.
In this respect industry funds and SMSFs are natural bedfellows.
Finally please consider purchasing a copy of this book "A How To Book Of Self Managed Super Funds". You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
The 5th edition has just been released.
For details of the changes made from version 4 to version 5 visit: http://www.atcbiz.com.au/r.php?r=1nhgpm2
As you'll see from the list there have been many changes.
Two purchase options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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