Sonny put in a withdrawal request for part of his funds in a superannuation scheme. He received verbal and written confirmation that his request had been accepted and that the sum requested would be paid into his bank account within five days.
Unfortunately, financial markets were volatile when Sonny made his request, which affected the price of the assets held by the scheme. The Trustees suspended withdrawals from the scheme before Sonny’s withdrawal was complete.
When Sonny’s request was eventually processed, his assets had declined in value, and Sonny was paid $6,595 less than he expected when he made the withdrawal request.
Sonny complained to FSCL
Sonny argued that the Trustees did not have the right to change a payment it had already promised him. He argued that the $6,595 shortfall should be refunded to him.
The Trustees argued that they validly suspended the scheme in order to revalue the assets held by the scheme. It would be inequitable for some members of the scheme to access their funds if the scheme’s assets were valued higher or lower than the amount they were actually worth. The Trustees noted that they acted in the best interests of all members of the scheme by delaying Sonny’s withdrawal request.
FSCL acknowledged that the transaction was frustrating for Sonny, especially after he received confirmation that a payout would proceed at a certain rate.
However, the terms of the Trust Deed specifically allowed the Trustees to suspend withdrawals from the scheme in times of market volatility.
The Trustees had an obligation to act at all times in the best interests of the scheme and all of the scheme’s members. In this case, the Trustees acted in the interests of all members by ensuring that no inequitable transactions were made. FSCL’s view was that the Trustees had not breached its obligation to act in the best interests of the scheme’s members.
FSCL’s CEO recommended to the scheme administrator that fuller disclosure should be made to a member when a withdrawal request is made.
Where an estimated payment amount is given it should be made clear to the member that the estimated payout amount could rise or fall and, in times of significant market volatility, the amount of the fall could be large.