SMSF-bashing begins as financial services inquiry looms With the race that stops the nation having been run and won there is another race in progress. In this race the winners will be those that have the most influence on the recently announced financial services inquiry. So far the jockeying for position has been done by the big financial institutions to the detriment of the unfancied but well-performing SMSF sector. The jockeying started with SMSFs being blamed for the increase in property prices and a call for increased regulation of the sector. John Brogden, CEO of the Financial Services Council, is calling on the government to introduce a levy on SMSF trustees to build a compensation fund that would be paid out to SMSF victims of fraud. His reasoning is that there are a certain number of SMSF trustees that should not be managing their own money because they do not understand what they are doing. SMSF trustees are not the only investors subject to fraud and are not good at managing money. There have always been people who will maximise their personal wealth, either through running dodgy investment businesses or recommending investments due to high commissions, to the detriment of the investors. Also jockeying for position on behalf of the large financial institutions has been Brad Cooper, former chief executive of the BT Financial Group, with another statement about SMSFs. In Cooper's view SMSFs are only an appropriate vehicle for those people who have the time and skills to dedicate to them. Cooper is also worried about the poor selling practices and the excessive behaviour in the financial planning industry related to real estate purchases within self-managed super funds. Both Cooper and Brogden, rather than trying to introduce greater regulation or restrictions on SMSFs, would be better to use their political influence to increase the regulation on the people profiting from the selling of these investments. You cannot argue against the fact that there are a number of trustees that do not have the financial sophistication or knowledge to make all of the decisions related to the management of their SMSFs. In many cases those trustees use service providers and advisers to help them with their duties and investment selection. Those SMSF trustees without the necessary skills that totally manage their superannuation fund, and fall victim to fraud or bad investments, would more than likely be the investors who would fall victim to fraud outside of superannuation. So trying to increase the regulation of the SMSF sector for this minority of people hardly seems fair. Thankfully at least one person from the banking sector is not into bashing SMSFs and is making constructive suggestions to the financial services inquiry. Mike Hirst, the managing director of the Bendigo and Adelaide Bank, said at its AGM: "It's vital the inquiry turns its collective mind to the sheer weight of regulation that's being driven through the industry and the cost of that to business and consumers. In our industry it provides larger players with funding and regulatory advantages that ultimately restrict consumer choice. His point being that the four major banks due to their size and funding have a regulatory advantage that ultimately restricts consumer choice. One suggestion that has been put forward more than once, that I unfortunately doubt the inquiry will seriously consider, is to ban banks from owning financial advice companies that are in effect used as a distribution channel for their financial products. Hopefully when the inquiry releases its recommendations it won't have jumped on the SMSF-bashing band wagon as well.