Labor MP Stephen Jones has warned that the government’s FOFA amendments do not properly protect investors in the “lightly regulated” SMSF sector, and may result in more victims of financial fraud.
Addressing the House of Representatives during a parliamentary debate last week, Mr Jones said the amendments to the Future of Financial Advice legislation, passed by the lower house on Wednesday, will weaken protections for SMSF trustees.
“[The SMSF sector] is lightly regulated and has different arrangements in place on the assumption that, if people opt for SMSFs, then they are active and engaged investors. That assumption is not always sound.” Mr Jones said.
“I know that from my own experience of talking to constituents in their dozens who thought their superannuation was no different from the superannuation that they were contributing to when they were a part of an employment-based scheme,” he said.
The MP for the NSW south coast seat of Throsby also said the government should act now to properly regulate the SMSF sector, otherwise people will start to question why nothing is being done.
“We saw this as an issue which, if not dealt with, would create more victims of financial collapse, financial fraud and mismanagement down the track,” Mr Jones said.
“If we did not get it right, at some point down the track people were going to point the finger at government and say, 'Why did you not get the regulatory framework set straight when you had the opportunity?'”
Mr Jones has been a longstanding advocate on the issue of superannuation fraud protection after some of the constituents within his electorate lost their savings in the collapse of Trio Capital.
“Hundreds of victims of this financial fraud were from my electorate of Throsby,” Mr Jones said.
“Trio Capital, in my research, was probably the largest superannuation fraud in Australian history — about $176 million of superannuation funds were lost and they are unlikely to ever be recovered,” he said.
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