All superannuation funds, not just self-managed funds, are susceptible to fraudulent schemes due to the establishment process currently in place and changes need to be made to the retirement savings environment to stop these illegal activities, according to the Self-Managed Super Professionals' Association of Australia (SPAA).
"Fraud and SMSFs (self-managed superannuation funds) are not linked together," SPAA chief executive Andrea Slattery said.
SPAA chair Sharyn Long said it is not people that have self-managed superannuation funds that are doing anything wrong.
"It's fraudsters that are coming in and using all super funds, not just self-managed super funds. It's just that for some reason self-managed super funds seem to have been tarnished with this bad reputation associated with fraud," she said.
On the whole fraudsters are setting up bank accounts that appear to be linked to a superannuation fund but are not and are using these to get individuals to roll their existing super balances over into the bank accounts before absconding with the transferred monies.
While both SMSFs and Australian Prudential Regulation Authority-regulated funds have been caught out by these practices, SPAA is worried about a regulatory clamp down on SMSFs as a result of the public misconception that only SMSFs are vulnerable.
As an alternative SPAA has suggested a number of new measures to combat the situation, including approaching the policing of the situation from a central perspective, allowing transfer of information between the regulatory bodies, and a more robust verification process.
The association has even suggested a new bank product be developed for SMSF trustees only.
