This could easily have been avoided

When endeavouring to make a change of any significance, doing your homework or due diligence first is key. This principle applies to plenty of scenarios in business, such as hiring a new employee or perhaps looking to acquire a significant asset or another business. In doing so you will hopefully discover any issues that may arise down the track and as such avoid them before they happen.

Based on this premise, some of the problems that have arisen from the introduction of SuperStream to SMSFs have certainly come as a surprise.

Don’t get me wrong, I’m not saying the implementation of a new system has to be done in a completely flawless manner. When undertaking such a significant change in the accepted method by which monies flow in and out of superannuation funds, there are naturally always going to be teething problems, particularly when technology is involved.

For example, the ability for all SMSFs to obtain an electronic service address was one of those requirements that always had the potential of resembling the unenviable task of herding cats. For a start, there were only 15 service providers to choose from and some of them were only facilitating member contributions and not balance rollovers. Hopefully this situation will improve now Australia Post has come to the party offering a full service proposition.

But there is a situation causing SuperStream angst that could have so easily been avoided, even without really having to doing much preplanning research or testing. I’m referring to rollovers out of SMSFs into Australian Prudential Regulation Authority (APRA)-regulated funds that are being prevented from being executed because of standard operating procedures most of the major banks have in place.

SuperStream rollovers are supposed to be performed electronically and executed using one transaction only. All else being equal, this in theory will allow the receiving fund, that is the APRA-regulated fund in the situations to which I’m referring, the ability to record one payment reference number, which in turn allows them to process and finalise the transaction.

Of course, member rollovers are likely to involve large amounts of money, often in the hundreds of thousands of dollars, especially if individuals of an older demographic are involved. Under the SuperStream system, these amounts have to be moved via electronic funds transfer (EFT) and herein lies the problem. Just about every bank places a daily limit on the amount of money that can leave an account using an EFT and this limit is often set anywhere between $20,000 and $50,000.

These banking protocols mean multiple EFTs are having to be established to process a single member rollover, resulting in multiple payment reference numbers and transaction rejection.

The frustrating aspect to this situation is any small business owner or individual who has ever tried to make payments over a certain dollar amount knows these limits exists. So how hard would it have been to realise this would be problematic for the operation of SuperStream? All you would have to do is ask either the banks or any small business owner.

Instead, organisations like the SMSF Association and APRA-regulated funds are having to work together to find an acceptable solution.

It highlights the importance of doing proper due diligence before making a major operational change that results in the exact type of inefficiencies the change is attempting to eliminate.