Overview

The ASIC Class Order [CO 06/0602] was enacted in 2006 under the Corporations Act 2001 to address the difficulties faced by trustees of legacy superannuation products in complying with the enhanced disclosure requirements introduced by the Corporations Regulations 2001. The primary objective of this legislation is to provide trustees with an additional two years to modify or replace their data processing systems or migrate affected products to modern systems, thereby ensuring they can meet the new disclosure obligations without undue burden. The Australian Securities and Investments Commission (ASIC) made this class order to facilitate a smoother transition for trustees, recognising the significant changes required to comply with the updated disclosure rules. The relief is available under specific conditions, including the cessation of new membership applications for the product, reliance on outdated technology, and the implementation of reasonable steps to meet the disclosure requirements by 1 July 2008.

Scope and Application

ASIC Class Order [CO 06/0602], issued under section 1020F(1)(c) of the Corporations Act 2001, provides transitional relief for trustees of legacy superannuation products, extending the compliance deadline for enhanced disclosure of transactions, fees, and costs in periodic statements by two years. This relief is intended to allow trustees sufficient time to modify or replace their data processing systems or migrate affected products to modern systems, which is particularly relevant given that legacy superannuation products often rely on outdated software and technology developed more than ten years ago. The relief applies to trustees who do not accept new applications for membership of the superannuation product, except in specific circumstances such as payment splits for family law purposes or contribution splitting. Trustees must notify ASIC in writing that they are relying on the relief and certify that the system used to maintain records of members' holdings relies on outdated technology, that modifying or replacing the system would impose an unreasonable burden, and that they will take all reasonable steps to comply with the disclosure requirements by 1 July 2008. The Class Order modifies specific regulations to provide this relief, ensuring that trustees can continue using an alternative method of common fund disclosure for two additional years.

Key Provisions

The main operative sections of the ASIC Class Order [CO 06/0602] under section 1020F(1)(c) of the Corporations Act 2001 provide relief for trustees of legacy superannuation products. This relief allows these trustees an additional two years to comply with certain disclosure requirements for transactions, fees, and costs in periodic statements (section 3). Specifically, this class order modifies regulations 7.9.16K and 7.9.60B, extending the compliance deadline for enhanced disclosure in periodic statements. It also modifies regulation 7.9.75(1A) to continue the alternative method of providing common fund disclosure for a further two years. To qualify for this relief, trustees must meet specific conditions, such as indicating in the periodic statement who can be contacted for details about transactions and costs, and certifying that they do not accept new membership applications for the superannuation product except under certain circumstances. The obligations imposed on parties governed by the ASIC Class Order [CO 06/0602] are quite detailed. Trustees must notify ASIC in writing that they are relying on the relief provided by the order. They must also certify that their system for maintaining records of members' holdings relies on software or other technology that was substantially developed more than 10 years ago, and that modifying or replacing the system to comply with the new disclosure requirements would impose an unreasonable burden or be detrimental to product holders. Additionally, trustees must take all reasonable steps to ensure they can make the required disclosures from 1 July 2008. These obligations ensure that trustees are transparent about their reliance on legacy systems and their efforts to transition to compliant systems. Any breaches of the obligations set out in the ASIC Class Order [CO 06/0602] can result in civil or criminal consequences. While the explanatory statement does not detail specific penalties, the general provisions of the Corporations Act 2001 provide that breaches can lead to substantial fines and, in severe cases, imprisonment. The exact penalties depend on the nature and severity of the breach, but they can be significant. Trustees who fail to notify ASIC of their reliance on the relief or who do not take reasonable steps to comply with the order by the specified deadline may face enforcement actions from ASIC. It is essential for trustees to adhere to the requirements to avoid these potential consequences.