Christine St Anne is Morningstar’s online editor, and wrote a timely reminder and suggestions for avoiding fraudulent investments in your self-managed super fund (as well as any investment!) in her article Avoiding a Super Fraud
It was only a couple of years ago when the collapse of the Trio Capital left 6,000 people without their superannuation savings. Around $180 million of investors’ money was lost.
Only one person involved in the scam was sent to gaol, while 10 of the perpetrators were subjected to industry bans. History could well repeat itself following media reports about a recent government inquiry into financial scams.
Australia’s $1.8-trillion superannuation industry is increasingly being targeted by criminals, The Australian newspaper reported last week.
According to Australian Federal Police deputy commissioner Michael Phelan, self-managed superannuation funds (SMSFs) are particularly vulnerable to organized crime.
Phelan told The Australian: “A lot of this money is available for sophisticated criminals to have a go at.”
As investors struggle to get greater investment returns, people should be vigilant when being tempted by lucrative offers, Phelan noted.
It might seem difficult to understand how sophisticated investors like SMSF trustees can be caught up in fraud. However, Phelan believes such fraud is seriously under-reported because people are embarrassed that they have been duped, particularly professionals such as doctors, lawyers and accountants.
Phelan’s views were echoed by Australian Crime Commission chief Chris Dawson. The same article noted that Dawson agrees that the SMSF sector is one that needs to be given close attention, not just by law enforcement and the regulators, but by the investors themselves because super is not used as an everyday account.
He said criminal entities would exploit this sort of area because investors don’t monitor it themselves and can’t rely on the regulators to do so.
Given what happened with Trio, the onus seems to be on the investor when it comes to taking responsibility for avoiding financial scams.
So, what can investors and SMSF trustees do to prevent themselves from being victims of fraud?
It is difficult, as a lot of websites are very sophisticated and can even look more real than the original company website, SMSF Professionals’ Association of Australia (SPAA) director of technical and professional standards Graeme Colley says.
Nevertheless, trustees can do some simple checks on such websites, he says.
Investors should check that the data is not outdated and that any click-throughs in the website actually land on relevant pages.
Colley also says trustees should ensure the adviser has an Australian financial services licence (AFSL).
“Investors should do a check on that person. Besides checking on whether that adviser has an AFSL, investors should also ask their peers or industry professionals about the business,” he says.
Trustees and investors can also fall victim to identity theft. The government’s moneysmart website provides simple and handy tips on how to avoid this sort of scam:
- Never give your personal details to people you don’t know. If you receive a call from someone who claims to be from your bank or any other organisation, don’t give them your details. Call the organisation in question to check it is really them calling. Never click on a link or call a phone number in an email — use a phone directory to look up the correct number.
- Check your bank and superannuation statements. If you see any unusual transactions, contact your bank, credit card provider or super fund immediately.
Tips to protect your computer and mobile phone include:
- Always type the website address into your browser. Don’t click on a link in an email or open emails requiring you to enter your personal information. They could be scams.
- Disable pop-ups on your browser. People can use pop-ups to install programs on your computer that “spy” on you or record your key strokes. This is how they find out passwords to your bank account and other accounts. Most internet browsers let you block pop-ups.
- Make your passwords hard to guess. Use a combination of numbers and letters and change your passwords frequently.
- Install up-to-date anti-virus software. It will automatically prevent, detect and remove any suspicious programs from your computer or mobile device.
- Enable security settings on your mobile device. Turn off Wi-Fi, Bluetooth and GPS when not in use.
- Never use public computers for banking or payments. If you use a computer at a library or internet café to look up your bank account or do online shopping, your account details will be stored on the computer. You do not want your important online banking details to get into the hands of others.
And of course the old adage remains as important as ever: If something is too good to be true, it usually is.
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