SPAA says competency test for trustees ‘elitist’
19 November 2013: The notion that SMSF trustees should have a “competency test” as suggested by the visiting European financial literacy specialist Robert Holzmann has been rejected by the SMSF Professionals’ Association of Australia (SPAA) as “elitist”.
SPAA CEO Andrea Slattery says: “It would seem obvious to point out that anyone running a business, including company directors, trustees of trusts, and partners in partnerships, do not require mandated training to do their job.
“Many of them are responsible for unrelated investors’ money and yet there is no requirement they have formal academic qualifications.
“At least with an SMSF, the trustees are responsible for their own money. Perhaps the simple reason SMSFs have performed on par with the APRA-regulated funds is the simple fact
it is their money and they have a greater interest in ensuring it is invested wisely and therefore more conservatively to ensure real gains.
“With the trustees of super funds we could also include the need to have experience as well as qualifications. A person with academic qualifications still needs to supplement that with practical learning if they are to be valued as the trustee of a large fund.”
Holzmann noted that recent statistics from CEPAR, the ARC Centre for Excellence in Population Ageing Research at the University of NSW, showing that 27.1% of SMSF trustees only have a trade or diploma qualification while 13.7% have only completed high school. “If you are not sufficiently equipped with knowledge you are running a serious risk as an SMSF trustee,” he told The Australian. In fact, about 75% of trustees have undergraduate degrees or higher and the trades-people are either small business owners or self-employed.
Slattery says it’s interesting to note that the last APRA Trustee governance report into the APRA-regulated sector showed more than 90% of these funds did not require any formal education training or requirements to be a trustee, and that 81% did not require any superannuation or investment knowledge to be a trustee. Yet APRA fund trustees manage billions of dollars of other people’s savings.
“Finally, when the Cooper Review handed down its final report in 2010, it specifically ruled out formal training for SMSF trustees. People need to be reminded that Cooper said the SMSF sector had been performing well and was well managed and there has been evidence since to suggest the situation is any different three years later,” she says.
The SMSF Professionals’ Association of Australia (SPAA) is the authoritative voice for the self-managed superannuation fund (SMSF) sector. SPAA, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs, is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.