ASIC Class Order [CO 14/425]

ASIC CLASS ORDER [CO 14-425]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 14-425] under paragraph 1020F(1)(c) of the Corporations Act 2001 (the Act).

Paragraph 1020F(1)(c) of the Act provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.

1. Background

Regulation 7.9.20AA of the Corporations Regulations 2001 (the Regulations) require regulated superannuation funds (other than self-managed superannuation funds) to disclose long term performance returns to assist members to understand the long term performance of their superannuation. These are referred to in this Explanatory Statement as the “long term performance reporting regime”.

On 19 February 2010, following discussions with the superannuation industry, the then Minister for Financial Services, Superannuation and Corporate Law announced refinement proposals to the long term performance reporting regime. This aligns with the current Government's de-regulation agenda.

Under the proposals:

(a)                exit statements are to be excluded from the regime;

(b)               industry were permitted to use inserts to provide five-year performance information until 30 June 2011;

(c)                “traditional” funds of an insurance nature are to be exempted from the regime; and

(d)               approved deposit funds and pooled superannuation trusts are to be permitted to provide annual reports online.

Class Order [CO 10/630] (the principal class order) provides relief from the operation of the current long term performance reporting regime that are proposed to be refined, by implementing the proposed refinements pending the making of amending regulations. This assists industry by providing greater certainty regarding their compliance obligations.

The principal class order also extended transitional disclosure requirements under subregulation 7.9.20AA(2) of the Regulations so that it also covered the period from 1 July 2010 to 30 June 2011.

ASIC subsequently made Class Orders [CO 11/554], [CO12/622] and [CO13/752], which varied the principal class order to extend the maximum period of operation of the principal class order to 19 July 2014.  Class Orders [CO 11/554], [CO 12/622] and [CO13/752] did not extend the transitional disclosure requirements under subregulation 7.9.20AA(2) of the Regulations for a period beyond 30 June 2011.

2. Purpose of the class order

The purpose of this class order is to extend the maximum period of the operation of the principal class order for a further 12 months so as to allow additional time for the proposed amending regulations to be made to implement the refinements.

3. Operation of the class order

This class order extends the operation of the principal class order to the earlier of:

(a)               the commencement of amendments to the Regulations which have the same or similar effect to the modifications or variations made by the principal class order; and

(b)               19 July 2015.
 

4. Consultation

Before making this class order, ASIC consulted with the Department of the Treasury, but did not engage in consultation with industry. The class order is a transitional measure of a minor or machinery nature.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

ASIC Class Order [CO 14-425]

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of legislative instrument

The purpose of this legislative instrument is to amend ASIC Class Order [CO 10/630] (the principal class order).  The principal class order provides relief from the operation of the current long term superannuation performance reporting requirements that are proposed to be refined by amending regulation.  The principal class order modifies or varies Regulations 7.9.20AA and 7.9.75BA of the Corporations Regulations 2001(Regulations) to:

(a)                exclude exit statements from the regime;

(b)               permit the use of inserts to provide five-year performance information until 30 June 2011;

(c)                exempt “traditional” funds of an insurance nature from the regime; and

(d)               permit approved deposit funds and pooled superannuation trusts to provide annual reports online.

The principal class order has effect until the earlier of commencement of any amendments to the Regulations which have the same or similar effect to the modifications or variations contained in the class order and 48 months after the commencement of the class order.

This legislative instrument extends the maximum period of the operation of the principal class order until 19 July 2015.

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms.

Conclusion

This legislative instrument is comparable with human rights as it does not raise any human rights issues.