Australian Regulatory Compliance Review

Simplified Superannuation

The Tax Laws Amendment (Simplified Superannuation) Act 2007 will apply from 1 July 2007.

This Act implements the new superannuation rules announced in the last Budget. The final decisions can be found here. There are also fact sheets.

ASIC will supervise disclosure and implementation by super funds. ASIC said that it expects superannuation trustees to disclose the simpler superannuation changes to fund members within a timeframe that allows members to act on the changes.

ASIC also expects trustees to implement good practices and disclose the simpler super changes, prescribed under The Tax Laws Amendment (Simplified Superannuation) Act 2007, so that fund members are in a position to use this information and determine whether they need to make any changes to their superannuation arrangements.

UPDATE: A Speech by Raelene Vivian, Deputy Commissioner of Taxation to the Conference of Major Superannuation Funds sets out the immediate administrative impacts of the new law.

Insurance Acts updated

ComLaw has issued updated consolidated versions of the Insurance Act 1973 and the National Health Act 1953.

Pandemic planning

David Lewis General Manager APRA recently spoke on 'Pandemic planning for the financial sector' at the Business Continuity Conference in Sydney.

APRA is seeking to improve the financial sector’s resilience to cope with the impact of a potential human influenza pandemic.

He said:

"A human influenza pandemic would have a significant effect on the financial sector: both, directly, in terms of reduced delivery of financial services; and, indirectly, in terms of the potential financial impacts on banks (and other deposit-takers) and insurance companies.

Some of the critical business functions offered by financial institutions that may come under pressure include:
• cash supply and currency distribution;
• payroll processing and government payments;
• retail payment systems and banking services (including e-payments);
• access to credit;
• clearing and settlement systems;
• financial markets trading;
• processing of insurance claims.

Clearly, any prolonged disruption to these sorts of services would have a significant impact – not only on the financial institution which provided them, but also on the wider community.

For this reason, continued access to a number of these services has been identified as ‘critical infrastructure’ in the Commonwealth Government’s Influenza Pandemic Action Plan. In the event of a pandemic outbreak, APRA and other Government agencies have plans in place to respond to any breakdown in the delivery of essential financial services."

New prudential standards for life insurance companies

APRA has released new prudential standards and prudential practice guides on risk management (LPS 220) and business continuity management (LPS 232) for life insurance companies (including friendly societies).

The new prudential standards take effect on 1 January 2008.

GlaxoSmithKline's Ribena misleading advertising

In advance of a hearing in New Zealand in relation to claims that the manufacturers of Ribena may have misled consumers about the Vitamin C content of Ribena blackcurrant fruit drink products, GlaxoSmithKline Australia Pty Limited self-reported the discrepancies to the Australian Competition and Consumer Commission and provided court enforceable undertakings.

More

ASIC v Citigroup continues

ASIC has published its Statement of Claim and opening submissions together with Citigroup's opening submissions together on the one page.

Draft Corporations Amendment Regulations released for consultation

The Parliamentary Secretary to the Treasurer, Chris Pearce, has released a package of draft Corporations Amendment Regulations for public consultation.

These regulations will implement some of the more technical amendments to address issues that were identified during the Corporate and Financial Services Regulation Review process last year. 

The amendments seek to minimise regulatory burden in the provision of financial services through such things as changes to aspects of disclosure. The regulations also make several other amendments drafted in response to market developments and a series of amendments to correct errors or anomalies in the current Corporations Regulations  2001.

It is proposed that Corporations Regulation 2N.2.01 be amended to remove the obligation on public companies to notify ASIC each year of the top 20 shareholders.

The draft regulations relating to FSR include provisions that :

• if a client clearly rejects a product and/or advice, a Financial Services Guide and a Statement of Advice do not have to be provided in respect of that product and/or advice;
• a Financial Services Guide can be combined with a disclosure document under Chapter 6D, similar to the provision which enables a Financial Services Guide and Product Disclosure Statement to be combined;
• the requirement to update a Financial Services Guide where the change would relate to information that is not materially adverse be removed, provided there is disclosure on how access can be made to the updated information;
• ‘badging’ does not constitute general advice so long as the relevant modification is not to such an extent that a reasonable person would consider the person who has placed their logo on the document to have provided, endorsed or otherwise assumed responsibility for any financial product advice in the document. The person placing their logo on the document must also not have exercised any form of control over the content of the document.
• there be relief from the dollar disclosure provisions in relation to a general insurance PDS. Where a cost or benefit is specific to a particular insured, a general insurer will be able to satisfy the dollar disclosure provisions if such costs and benefits are disclosed, in dollar amounts, in the policy schedule.
  Where dollar disclosure occurs in the policy schedule, general insurers would still be required to
  disclose the relevant cost or benefit in the PDS by providing a range, a percentage or a description.
  Where a general insurer concludes that they cannot disclose a cost or benefit in dollar amounts in
  the PDS or the policy schedule, then they would have to apply to ASIC for relief.
• regulated entities would be allowed to incorporate information into the SOA by reference to other sources.
• regulated entities may incorporate the following information into their PDS by reference:
  • information about any other significant characteristics or features of the product or of the
  rights, terms, conditions and obligations attaching to the product; and
  • any other information that might influence a decision to acquire a product.
  Product providers could only incorporate such information by reference where:
  • the information is publicly available on a website or in another document; and
  • the PDS includes a statement that refers to the particular information that is available publicly
  from another source, provides details of the information and states that the client has the right
  to obtain a copy of any or all of the information previously given.
• the amendment of  section 941D, which deals with the timing for the provision of an FSG, so that when a financial service is provided an FSG may be provided (at the time that a PDS is provided), without the need for oral disclosure, provided that:
  • the relevant financial service is the provision to the client of a financial product and/or advice
  relating to that financial product; and
  • a PDS for the product has been given to the client, or will be given to the client no later than
  the time the FSG is given; and
  • the entitlement to any remuneration (including commissions) or other benefits in respect of
  the service is extinguished if the client exercises the cooling-off rights attaching to the
  product.

Submissions should be received by the  Treasury by 23 April 2007.

ASIC v Citigroup commences

The trial of ASIC's action against Citigroup for conflicts of interest and insider trading in relation to the Toll takeover of Patrick (commenced last year) has started (see The Australian's report).

ASIC's further amended statement of claim (pdf) can be downloaded here.

UPDATE: Sox First has a copy of Citigroup's opening statement in its defence.

UPDATE: Closing submissions

UPDATE: Decision

ASIC redesigns its website

ASIC has launched its redesigned website: on the front page are news summaries and direct links for forms and register searches.

Access Card update

The  Minister for Human Services, Senator Chris Ellison, said following the release of the report of the Senate Committee Inquiry into the Human Services (Enhanced Service Delivery) Bill 2007:

“The legislation will now be presented as one package, to be introduced in June. This will mean members of the public can see the full detail of the legislation.”

“The Government is committed to providing ordinary Australians with a better health benefits, veterans’ and social services system, and we remain on track to rolling out the access card in 2008.”