Australian Regulatory Compliance Review

Simplified PDS's for superannuation and managed investment product disclosure

Treasury has released for public comment draft regulations and an example Product Disclosure Statement (PDS) for superannuation and managed investment product disclosure prepared by the Financial Services Working Group (the Working Group).

Under the proposed regimes, Product Disclosure Statements (PDSs) will be limited to six A4 pages of key information presented in a clear and uncomplicated manner. These documents will be supported by more detailed or frequently updated information provided online so that businesses can enjoy greater flexibility without compromising investor protection.

The Working Group requests comments on the draft regulations and example PDSs by 26 February 2010.

Cooper Superannuation System Review Preliminary Report

The Cooper Review of the superannuation system has published its Preliminary Report on Governance issues.

It has also published a new Issues Paper on the structure of superannuation funds.

Superannuation clearing house draft legislation released

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has released draft legislative amendments to provide a free superannuation clearing house service to small businesses. The measure is designed to reduce the cost to small businesses of complying with their superannuation obligations.

The free superannuation clearing house service for small business will be delivered through Medicare Australia. The service will be available to eligible small businesses (those with less than 20 employees) from July 2010.

The draft legislation will amend the Superannuation Guarantee (Administration) Act 1992, the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993.

Comments on the draft legislation are open until 23 December 2009.

Superannuation reviews

This speech by the Minister for Superannuation gives a useful background to the Cooper review into governance and efficiency, the Henry tax review and the Ripoll parliamentary inquiry.

Superannuation clearing house service for small business

The Minister for Superannuation, Chris Bowen MP, and Minister for Small Business, Craig Emerson MP, have announced that the Government will deliver a free superannuation clearing house service for small business through Medicare Australia.

The clearing house service will be available for small businesses with less than 20 employees from July 2010.

Eligible small businesses will register for the service on-line from May 2010 and thereafter their superannuation contributions will be paid to a single location (the clearing house) which will forward them on to the nominated superannuation funds.

Small businesses that choose to use the clearing house service will have their legal obligation to make superannuation contributions discharged when payment of the correct amount is made to the clearing house.

Employers will also be able to pass on choice of fund nominations to the clearing house for processing.

Medicare Australia will develop an online system for registration and on-going payments, with payments initially being made via electronic funds transfer (EFT).

Lost members' superannuation accounts

The 2009-10 Budget contained an announcement that superannuation providers will be required to transfer lost accounts which have balances less than $200, and those accounts which have been inactive for a period of five years and for which there are insufficient records to identify the owner, to the Commonwealth.

The measure will have effect from the 2010-11 income year.

Treasury has released an Exposure Draft of the Superannuation Legislation Amendment (Lost Members’ Superannuation Accounts) Bill 2009

Submissions close on 25 September 2009.

Draft AML/CTF Rules relating to cashing out of low balance superannuation

Austrac has released draft AML/CTF Rules exempting superannuation funds from carrying out the customer identification requirements of the AML/CTF Act on customers where the superannuation account balance is not greater than $1,000, the whole of the interest of the customer in the superannuation fund has been cashed out and the customer's account is closed as soon as practicable after the cashing out.

A public consultation period is open from 20 August 2009 to 3 September 2009.

Prudent practices for APRA-regulated superannuation trustees

The Australian Prudential Regulation Authority (APRA) has released draft guidance on a number of prudent practices for APRA-regulated superannuation trustees.

APRA has also released a discussion paper to assist in public consultation on the four new draft guides:

• draft Superannuation Prudential Practice Guide – SPG 110 – Capital;
• draft Superannuation Prudential Practice Guide – SPG 200 - Risk Management;
• draft Superannuation Prudential Practice Guide – SPG 230 - Adequacy of Resources; and
• draft Superannuation Prudential Practice Guide – SPG 530 – Fitness and Propriety.

The release of the discussion paper and draft superannuation guides follows the release for consultation earlier this year of revised guidance on reserves and conflicts of interest.

The four prudential practice guides address measures that might be employed by a trustee and its directors to satisfy obligations imposed under legislated licence conditions, various operating standards and other provisions under the Superannuation Industry (Supervision) Act 1993 (SIS Act) and its regulations.

APRA alleges victimisation under section 68 of the Superannuation Industry (Supervision) Act

APRA has made a criminal complaint that a former chief executive officer of the Queensland Retailers and Shopkeepers Association (QRTSA), victimised two directors of a superannuation trustee company.

APRA alleges that by terminating the employment of a QRTSA employee and terminating the engagement of the auditor of QRTSA, both of whom were also trustee directors of a superannuation fund linked to QRTSA, the accused committed acts of victimisation contrary to section 68 of the Superannuation Industry (Supervision) Act 1993 (the SIS Act).

APRA alleges that by terminating their employment, the accused caused both individuals to suffer a financial detriment for simply carrying out their legal obligation in their capacity as trustee directors to act in the best interests of fund members.

The case has been adjourned to 18 September 2009 at the Brisbane Magistrates Court. The Commonwealth Director of Public Prosecutions is prosecuting the matter.

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.