The self-managed superannuation (SMSF) sector is still experiencing frustrating delays when rolling over funds from Australian Prudential Regulation Authority (APRA) to SMSFs, despite the introduction of new standards, according to the SMSF Association.
The SuperStream rollover standards for SMSFs, which commenced in October 2021, were designed to improve the efficiency and security of rollovers between the two sectors. This was to be achieved through streamlining the process and eliminating paper-based rollovers.
However, speaking at the SMSF Association’s National Conference, deputy chief executive, Peter Burgess, said delays still existed six months after the introduction of the standards.
Burgess criticised APRA-regulated funds’ inability to adequately verify the SMSF bank account as a major contributing factor.
Burgess said the Australian Taxation Office’s SMSF Verification Service (SVS) enabled APRA-regulated funds to verify aspects of the SMSF, including its compliance status, its Australian Business Number and if the member requesting the rollover was a member of the fund.
“However, when it came to the fund’s bank account, the ATO’s SVS only enables the APRA-regulated funds to verify that the information provided at the time of the rollover request matches the information that the ATO has on file,” Burgess said.
“There is no verification against the information held by the financial institution, and therein lies the problem for the APRA-regulated funds which are required under their Anti-Money Laundering/ Counter Terrorism Financing obligations, and their own client identification processes, to identify and verify the SMSF bank account against information held by the financial institution.”
To avoid unnecessary rollover delays, when initiating a rollover from an APRA-regulated fund, Burgess encouraged advisers to clarify what documents were required by the APRA-regulated fund to satisfy their bank account verification requirements.
The SMSF Association said it was meeting with the APRA-regulated fund sector on a regular basis, and was encouraged by its commitment to unpacking the issues.
“Ultimately from the SMSF Association’s perspective, we would like to reach agreement with the APRA-regulated funds about the bank account verification documentation that they require to satisfy their obligations.”
“Hopefully this can then become a standard that applies to all APRA-regulated funds so everyone knows up front what bank account verification documents are required, and we can avoid situations like we have now where the bank account verification documentation can vary between funds and sometimes within the same fund,” Burgess said.