Australia’s peak professional financial planning body today acknowledged the sober findings of a joint parliamentary review of the Trio Capital collapse – the largest superannuation fraud in Australia’s history.
The Financial Planning Association (FPA) said the key findings are a blunt prompt to financial regulators and product manufacturers to demonstrably lift protection and disclosure standards in the interest of protecting Australians from further fraudulent actions and criminal attack on their life savings.
“Today’s findings from the Parliamentary Joint Committee (PJC) review of the collapse of Trio Capital remind us that the client-first principle must apply as an iron-clad undertaking by all industry participants and those who oversee the sector,” said FPA CEO Mark Rantall.
The PJC acknowledged that the collapse of Trio did not result from a failure of advice. Rather, it was a pre-meditated and sophisticated fraud, which went undetected over years, despite several audits by regulators. A tip-off by an alert industry participant led to the uncovering of the fraud by ASIC.
“The details of this case, including the sad loss of capital and destruction of investor savings, remind us that vigilance and higher standards are required in the system. Australia is a global model for retirement savings, but is also the target for offshore attack from predators.”
FPA acknowledged the PJC recognition of the FPA’s position calling on higher standards for related gatekeepers including regulators, auditors, custodians and research houses.
Together with the Richard St John report there is now improved public awareness and acknowledgement that consumers must be protected from all participants – including financial planners – within the financial services sector.
FPA supports the PJC recommendations, in particular the specific recommendations related to Self Managed Super Funds, increased disclosure, improved checks and balances to better detect signals and greater powers and emphasis on superannuation fraud by the regulators and the Australian Federal Police (AFP).
St John compensation recommendation
The FPA further supports the PJC recommendation against the need for a compensation scheme, a finding which mirrors recent recommendations by Richard St John. A separate levy on SMSFs would not be appropriate and potentially undermine the reasons of choice and flexibility which lead many consumers to invest in a SMSF.
The FPA agrees with the committee’s assertion that financial professionals such as financial planners and accountants need to act in the client’s best interest when recommending a SMSF to clients.
The FPA strongly believes that FOFA along with the removal of the accountant’s exemption will go some way in helping with this.