Australian Regulatory Compliance Review

Document retention table update

Our general business document retention table has been updated to take into account AML/CTF requirements and the Fair Work Act.

Every business should have a document retention (and destruction) policy to suit its own circumstances.

Our table can be used as a starting point.

There will be variations between states and for particular industries.

Simplified superannuation advice guidelines

The Australian Securities and Investments Commission (ASIC) has released class order relief for superannuation fund trustees (and their authorised representatives) who provide personal advice to fund members about their existing super fund.

ASIC’s Regulatory Guide 200 and Class Order [CO 09/210] deal specifically with advice about a member’s existing interest in a super fund. CO 09/210 applies only to super fund trustees or their authorised representatives. The guidance and relief applies in certain circumstances, and does not cover more complex personal advice about super, including switching, or retirement planning advice.

The relief applies to all super funds (other than self-managed super funds), but to rely on the relief, super fund trustees will need an Australian financial services licence with a personal advice authorisation. Those super fund trustees who do not meet the requirements of the relief must comply with section 945A of the Corporations Act when providing personal advice.

Reminder: National Credit Code seminars

We will be holding a series of half day seminars on the new credit licensing and consumer credit regime as follows:

Brisbane: Tuesday 11 August (Cliftons)

Sydney: Wednesday 12 August (Grace Hotel)

Melbourne: Thursday 13 August (venue to be advised)

Adelaide: Friday 14 August (venue to be advised).

The Senate Committee is due to deliver its report on the draft Bills on 7 August.

The seminars will discuss:

• licensing
• training requirements
• changes to the Credit Code
• unfair contracts
• disclosure requirements
• the effect on existing contracts
• the effect on business lending
• external dispute resolution
• compensation requirements

Contact Levina Chim 02 8234 4777 for details.

For more National Credit Code and licensing information, visit our National Consumer Credit Reform site.

SMSF borrowing: risks in member giving guarantee for loan

The ATO's Taxpayer Alert TA 2008/05 "Certain borrowings by self managed superannuation funds ", discussed arrangements under which the trustee of a self managed superannuation fund (SMSF) enters into certain limited-recourse borrowings, which may not meet the conditions in subsection 67(4A) and/or breach other provisions of the Superannuation Industry (Supervision) Act 1993 (SIS Act), as well as related superannuation rules.

The ATO identified 5 features of such arrangements which may give rise to taxation and superannuation regulatory issues.

One of those features (relevant to whether the loan was limited recourse) was whether a personal guarantee for the borrowing is given by a third party, particularly when the guarantee is given by a member or a related party of the SMSF.

In draft taxation ruling TR2009/D3 the ATO has now advanced the risk of a SMSF Member in providing a personal guarantee for a loan to the fund by stating that:

A payment pursuant to that guarantee will constitute a contribution to the fund if the guarantor has no right of indemnity against the fund. A contribution will be made by a guarantor who has a right of indemnity only if the guarantor subsequently forgoes that right or is prevented from enforcing that right (for example by the statute of limitations).

Such a payment may breach the superannuation contribution limit.

Reasons for tax bonus decision (Pape v Commissioner of Taxation)

The High Court has published its reasons for its decision in April in Pape v Commissioner of Taxation [2009] HCA 23 that the tax bonus was constitutional.

It is a long decision (614 paragraphs) split 6-1 in favour in 4 separate sets of reasons.

The court acknowledged the need for the government to respond to the global financial crisis but did not go so far as to authorise any government to appropriate money and spend it for any purpose determined by parliament.

Revised ACCC immunity policy for cartel conduct

Following the introduction of criminal penalties for cartels, the ACCC has released its revised policy for the application of immunity in relation to cartel conduct.

The immunity policy applies to civil proceedings instituted by the ACCC.

Immunity from criminal prosecution will be determined by the Commonwealth DPP in accordance with the same principles that determine immunity under the ACCC’s immunity policy.

UPDATE: Here's the Trade Practices Amendment Act containing the anti-cartel amendments.

ASIC consults on securities lending

ASIC has released a consultation paper on disclosure of substantial holdings arising from securities lending or prime broking.

The consultation paper, Securities lending and substantial holding disclosure, seeks to improve disclosure of substantial holdings in practice and makes it clear that securities lending transactions and prime broking arrangements need to be taken into account in calculating a substantial holding.

Submissions on the proposals contained in the Consultation Paper close on 7 August 2009.

COAG Communique 2 July 2009

The Council of Australian Governments (COAG) meeting on 2 July 2009 focussed on further measures to overcome Indigenous disadvantage and the importance against the background of the global economic and financial crises of bolstering education, training and re-training efforts and securing further microeconomic and regulatory reform to enhance the economy’s future productive potential.

On the regulation front, COAG signed an Intergovernmental Agreement to underpin the establishment of national Australian Consumer Law, based on existing consumer protection provisions and new product safety regulation and enforcement regime, and a further IGA covering national business names registration.

Superannuation industry overview

APRA's latest Insight magazine contains an overview of the superannuation industry since 2007.

It is a useful summary of the impact of the economy on superannuation funds as well as regulatory developments.

Austrac enforceable undertakings

AUSTRAC has commenced a new enforceable undertakings regime.

An enforceable undertaking is a written undertaking that is enforceable in a court, given to and accepted by the AUSTRAC CEO. They are generally an alternative to civil or administrative action where there has been a contravention of the AML/CTF Act, the regulations or the AML/CTF Rules.

Austrac's first acceptance of enforceable undertakings are from Barclays Bank PLC and Mega International Commercial Bank Co,. Ltd , following a number of deficiencies and breaches, including reporting breaches,of Australia's anti-money laundering and counter-terrorism financing (AML/CTF) laws.

Barclay's breaches were identified following an on-site assessment.

The undertakings require the companies to:

• review transactions for a period of seven years and provide AUSTRAC any outstanding reports required by law;
• develop and implement proper systems and controls to ensure that the company complies in the future with its reporting and AML/CTF program obligations;
• submit to AUSTRAC an independent expert report detailing the company's compliance with the AML/CTF laws. The companies will also be required to submit similar reports in 2010 and 2011.