The SCA is urging the government to tighten regulations and controls around SMSFs and prioritise a review of financial abuse within the sector, as recommended by the 2024 Parliamentary Joint Committee on financial abuse.
Lily Jiang, Super Consumers Australia’s director of advocacy (campaigns), said the SMSF system was designed for self-management but it’s become a backdoor for financial abuse.
“When someone is moved into an SMSF through coercion or without their knowledge, they’re not just losing control of their super, they’re being made legally responsible for decisions they didn’t make,” Jiang said.
According to SCA, more than 1.6 million women have experienced partner economic abuse in Australia. It said financial abuse is estimated to cost victim-survivors more than $5.7 billion annually – $3 billion more than the total annual cost of scams.
The association continued that the misuse of SMSFs was highlighted in the 2024 government inquiry into financial abuse, along with the important role that professionals like financial advisers, planners and accountants can play in preventing and detecting abuse, as the “gatekeepers” who help set up the SMSFs.
Jiang said the very nature of SMSFs creates opportunities for coercion and abuse, where members are also trustees who make all the decisions about the fund.
“This is coupled with minimal oversight and limited consumer protections. The 2024 government inquiry into financial abuse highlighted this dangerous combination and the shortcomings in the SMSF system for preventing and addressing coercion and abuse,” she said.
She continued that as well as a review of financial abuse within the SMSF sector, SCA is also calling on the government to mandate proactive checks by super funds when members transfer balances into SMSFs, to help spot potential abuse early.
“[We would also like to see the government] lift standards across advice, planning and accounting professions, so that professionals are equipped to detect and act on signs of financial abuse,” she said.
“Additionally, we would like to see investmentin greater community awareness and frontline worker training, particular among culturally and linguistically diverse communities.
“For many women, superannuation is the largest and only asset they hold alone. Without concerted efforts to disrupt financial abuse in super, perpetrators will continue using mis-using structures like SMSFs with little consequences.”
