SMSF Association seeks to improve delayed APRA fund rollovers

Any current financial adviser understands the challenge attempting to roll-over a member’s balance from an industry or APRA-regulated fund into an SMSF. With every different fund having a different form to complete, and in some cases these requests requiring the client to contact the fund directly, what should be a simple process can extend into weeks and months.

By far one of the most time-consuming and challenging tasks for advisers is meeting the differing information standards required by each fund, particularly around where said rollovers are to be paid.

Speaking at the SMSF Association’s Annual Conference in Adelaide this week, deputy CEO Peter Burgess flagged some potential changes in the wings. While the SuperStream rollover standards for SMSF, which commenced in 2021 were “designed to improve the efficiency and security of rollovers between the two sectors” and eliminate paper-based rollovers, they hadn’t necessarily delivered as yet.

Burgess highlighted that the “SMSF sector is often still experiencing frustrating delays” and asked the question “what has gone wrong?” The answer was quite simple, in his view, it was the “inability to adequately verify the SMSF bank account” as a key factor.

Burgess explained that the ATO’s SMSF Verification Service (SVS) enables the APRA-regulated funds to verify many things, including the complying status of the SMSF, the SMSF’s ABN and that the member requesting the rollover is a member of the SMSF, but not the bank account.

“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 AML/CTF obligations, and their own client identification processes, to identify and verify the SMSF bank account against information held by the financial institution,” Burgess said.

The SMSF Association is onto the task, with Burgess confirming it is now meeting with the APRA regulated fund sector on a regular basis, and that the regulator is “just as committed and determined as we are to unpack all the issues” related to transfers.

To avoid unnecessary rollover delays, Burgess encourages advisers to clarify what documents are required by the ARPA-regulated fund to satisfy its bank account verification requirements. 

“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.

Staff Writer