Dominant SMSF trustees not an insurmountable issue
While an increasing number of dominant self-managed super fund (SMSF) trustees has been raised as an issue of concern by some members of the wider industry, Peter Hogan, Principal of Plaza Financial believes it is a concern already accounted for in superannuation legislation.
"The covenants in superannuation legislation require all trustees to act in the best interests of all members of the fund," he said. "There's nothing, for instance, that would say just because you have the largest amount of money in the fund, you get to say what happens in the fund."
That's not what the covenants are about," Hogan continued. "But the legislation makes it clear that all trustees are responsible for how the fund is run, and ultimately, if things aren't run properly then all trustees bear the consequences," he said.
In the case of an acrimonious relationship between SMSF trustees, Hogan admitted that difficulties were all but inevitable.
"Nothing is perfect in this world, and given the control issue that trustees have - be it in this circumstance or any other circumstance - there's always an opportunity for people to do the wrong thing," he said. "Of course, they have to actually decide to do that, and that's something you can never legislate against.
"It's the same as not being able to legislate against fraud and theft; you just have to accept that it happens and mitigate against it as best you can," Hogan said.
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