I’m not sure if you’ve noticed, but since the financial services royal commission released its final report the industry funds have become more vocal about what they think should happen to the superannuation sector. And surprise, surprise it involves going after SMSFs.
In recent months, calls for another review into SMSFs have been made by Australian Institute of Superannuation Trustees chief executive Eva Sheerlinck, AustralianSuper chief executive Ian Silk and the Australian Council of Trade Unions. To my mind there are a few reasons why these parties are advocating for this action.
The first is these people think what was uncovered during the royal commission was the definitive blow in the industry funds’ war with the retail fund sector. So if an official inquiry worked so well against one perceived enemy, why not use the same sword to kill off another foe.
The second is the predicted outcome of the 2019 federal election. If pre-election polling is to be believed, Labor is likely to form government for the next three years and the industry funds no doubt are seeing this as their time to dominate.
Let’s face it, I don’t think even the most uninformed person among the general public could believe the ALP has any affection for SMSFs. After all, opposition leader Bill Shorten himself is a former board member of AustralianSuper.
As usual, there is no credible reasoning behind the push. Basically it comes down to industry funds thinking because they were scrutinised as part of the royal commission, so SMSFs, not included in the commission’s terms of reference, now require the same type of examination.
To this point, it beggars belief industry funds think they were properly scrutinised at the royal commission or any other time for that matter.
And, of course, they will not acknowledge the SMSF sector has actually undergone three reviews in the past eight years, being the Cooper review in 2010, the Financial System Inquiry (FSI) in 2014 and the Productivity Commission last year.
Further, every time the sector has predominantly been given a clean bill of health, with any negative findings stemming from speculative negative scenarios, such as those regarding limited recourse borrowing arrangements at the conclusion of the FSI, or questionable data, such as that used by the Productivity Commission. But, of course, logic and reason don’t cut it in the face of industry fund belligerence.
Unfortunately, if Labor is voted in on 18 May, these industry fund attacks on SMSFs are likely to become louder and more frequent over the next three years.
There is no doubt in my mind both the industry funds and their mates in the Labor Party are looking to make a concerted push to have more people shut down their SMSFs and join an industry fund instead. To this point, I’m half expecting to see a Compare the Pair-type campaign to further this cause.
Certain SMSF stakeholders were declaring this ulterior motive when the ALP franking credit policy was announced and I wasn’t willing to believe it then, but I think I’m on board with this logic now.
I’m sure we’ll all be watching this space and, in particular, seeing whether or not the SMSF sector will consciously push back this time around.