The Self-Managed Super Fund Professionals' Association of Australia (SPAA) has forwarded a submission to a parliamentary inquiry into the collapse of Trio Capital proposing all product providers be charged a levy to establish a last resort compensation scheme to protect investors from loss as a result of fraudulent activities.
The measure is designed to work in a similar fashion to the current compensation scheme in place for the superannuation funds regulated by the Australian Prudential Regulation Authority (APRA).
"We taken a position whereby SMSFs (self-managed superannuation funds) should be treated the same as any other investor in the market, and are quite different from members of an APRA super fund, so we have aligned SMSF investors with the rest of the market," SPAA chief executive Andrea Slattery said.
"We believe any investor in the market should be able to receive compensation for theft and fraud if it has inadvertently happened to them and they have done everything possible to be compliant."
In making its submission, the industry body said it wanted to address the lack of equality in the compensation scheme arrangements currently existing in the industry.
"In the case of SMSF trustees themselves, some of them invest in markets that can access compensation schemes and others invest in assets that do not give them the ability to be compensated," Slattery said.
She emphasised SPAA wanted the levy to be paid by product providers because, as was highlighted in the Trio Capital collapse, they would most likely be the source of the mischief or fraud. In particular, investors should not have the levy directed at them as they are likely only to be the victims of these types of criminal actions.
In making its submission, SPAA said it would also be monitoring any developments in regard to financial planners and any proposed compensation schemes for investment vehicle collapses originating from the Future of Financial Advice reforms.
