Sent: 17-03-2009 10:26:01
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SMSF Professionals Association's annual conference
Last week I had great pleasure of attending the SMSF Professionals Association's annual conference where I learned a great deal.
There is simple not enough room in one article to discuss all the items that I personally found interesting so I will spread my thoughts over several weeks.
You have no doubt heard that Minister Sherry seems to have abandoned his idea of having a minimum asset value for Self Managed Super Funds and has called on the Self Managed industry to do its best to improve the knowledge of small fund trustees.
Perhaps the individual who stole the most attention at the conference was SPAA's Patron, The Hon Sir Anthony Mason, formerly Chief Justice of the High Court.
It's unusual to find anyone with his stature with any obvious interest in financial matters.
Over the years many conservative commentators have expressed misgivings about some of the High Court judgments made during Sir Anthony's tenure as Chief Justice. (He was appointed to the High Court in 1972 by an ALP government and was appointed Chief Justice during Bob Hawke's Prime Ministership.)
Regardless Sir Anthony's brief speech at the conference showed how valuable it is to have someone with his razor sharp intellect looking at financial services and the government regulatory environment that influences so much industry behaviour.
The journalist Peter Ryan once wrote that the great Doctor Johnson defined someone who was in "want of genuine depth, gravitas and discretion" as lacking "bottom". Perhaps the steeple is a relatively easy jump but one could hardly say this applies to Sir Anthony.
Sir Anthony's talk covered a broad canvas of issues about specific financial services industry problems and "the importance of professionalism".
He quotes one industry commentator who believes that ASIC needs to "seek a court ruling on what constitutes 'appropriate advice'.
"What constitutes 'appropriate advice' is a fact dependent question. So there can be no guarantee that a single court decision will provide comprehensive guidance. Even so, a court decision can call attention, in an instructive way, to salient factors.
"Indeed, one court decision has already done so, though in a special context. It is the decision of Debelle J. in Tip Top Dry Cleaners Pty. Ltd. v Mackintosh ... in considering the scope of the duty of the accountants and financial advisers in advising Tip Top, Debelle J. said:
'the scope of the duty depends on the client's need for advice. Thus, the scope of the duty which (the senior partner of the accounting firm and the accounting firm) owed to Tip Top included the duty to give advice which Tip Top appeared to need ... whether or not it had been specifically requested.'
"That duty included 'a duty to give comprehensive advice ... which touched on all relevant matters' ".
As most of us are aware, there are many court, tribunal and other cases involving the giving of advice. Most of these cases however revolve around old law and it is often difficult to comprehend which principles survive in revised laws. It simply takes too long for court cases to be finalised.
Sir Anthony also mentioned the matter of PI Insurance. "Compulsory professional indemnity has been made a requirement for financial planners. But we do not yet know whether the regime is working effectively, particularly with respect to the availability of adequate insurance cover. ASIC is looking into the matter. The issue is of crucial importance; already investors are resorting to litigation through class actions and they are supported by litigation funders."
It is worth pointing out that Paul Slattery QC mentioned in his talk to the SPAA Conference that one of his colleagues who specialises in insurance matters spends many hours dealing with cases involving insurers denying liability because they argue that certain actions were not covered by the insurance contract.
It is appropriate to conclude this article with the final paragraph of Sir Anthony's speech, "There is reason to believe that with the increasing focus on education and the increased availability of relevant information, the standard of literacy of SMSF trustees and auditors will improve. It is also to be hoped that the quality of advice given to participants in the superannuation industry by financial planners and advisers will improve. But it is impossible to believe that existing problems in the industry and the wider investment industry will be resolved in the absence of substantial reforms and a greater insistence on higher professional and ethical standards by all those who participate in the corporate world and the financial services industry."
Will the industry respond to this challenge in its usual fashion?
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