Cash account changes causing roadblocks with SMSF setups
Some recent changes by one of the major providers of SMSF cash accounts is slowing down the SMSF setup process in some cases, warns a technical expert.
Speaking to SMSF Adviser, SMSF Alliance principal David Busoli explained that Macquarie recently made some changes with the way its cash account operates which has created some issues with getting money and rollovers into the account.
Mr Busoli explained that up until recently, it was possible to get an ABN and TFN on a pro forma account and arrange for SuperStream rollovers or contributions to go into the account.
“Money couldn’t be taken out of the account until the account was properly set up but at least we could instigate the process for rollovers.
However since 1 September, Macquarie has said that it requires the account to be fully established before it can receive any deposits, Mr Busoli noted.
“Now by fully established, that means the application forms and the proof of ID and everything else. The issue that has created is that if you’re using a paper form, which we have tended to do, then Macquarie will take ten working days to get the bank account established,” he explained.
“That means we can’t instigate any rollovers or anything until that time.”
While Mr Busoli said he is only aware of Macquarie implementing these sorts of changes, it is understood that some of the other providers have also adopted similar measures with their accounts.
He noted that the process of setting up the account can be done quicker if its all done electronically.
“The problem with it all being done electronically is that it involves Macquarie contacting the trustees and seeing forms of ID such as a scan of their driver’s licence. Everyone is quite nervous about providing details of this nature - we’ve just had the recent Optus breach,” he noted.
“This has also become aromatic because even though the [electronic process] should only take three days, the actual process and the amount of back and forth between advisers and trustees to ascertain that these requests are valid, just creates issues of its own.”
Mr Busoli said he has seen examples where funds have tried to roll over money to a Macquarie account in early September shortly after the cash account changes happened and weren’t able to complete the SuperStream rollover within the three day timeframe as the account would not accept the money.
SMSF professionals should be aware that the process may be a little more convoluted than it was previously, he said.
“I understand that this has been changed for security reasons but it does mean that things may take longer than it otherwise would have,” he said.
Mr Busoli said it is likely that the security measures around things like cash accounts will only increase which may mean unavoidable delays.
“Trustees planning to do something quickly need to bear in mind that there may be a delay which is longer than usual,” he said.