EXPLANATORY STATEMENT
ASIC SUPERANNUATION (Amendment) Instrument 2015/1098
Prepared by the Australian Securities and Investments Commission
Superannuation Industry (Supervision) Act 1993
The Australian Securities and Investments Commission (ASIC) makes ASIC Superannuation (Amendment) Instrument 2015/1098 (the Instrument) under section 335 of the Superannuation Industry (Supervision) Act 1993 (the SIS Act).
Subsection 328(1) of the SIS Act provides that ASIC may, in writing, exempt from compliance with any or all of the modifiable provisions a particular person or a class of persons or a particular group of individual trustees or a class of groups of individual trustees. The modifiable provisions include a provision of Part 2B of the SIS Act. By section 335, ASIC may, in writing, vary or revoke an exemption under subsection 328(1).
- Background
To promote systemic transparency, subsection 29QC(1) of the SIS Act requires a Registrable Superannuation Entity (RSE) licensee to ensure that, where it is required to give information to APRA under a reporting standard that requires the information to be calculated in a particular way, and where the same or equivalent information is given to other persons, the information given to the other person is calculated in the same way as the information given to APRA.
The requirement under subsection 29QC(1) for RSE licensees to provide consistent information commenced on 1 July 2013. However, ASIC Class Order [CO 14/541] exempted RSE licensees from compliance with the requirement in subsection 29QC(1) until 1 July 2015.
The exemption in [CO 14/541] was granted as ASIC considered that further time was required to consult with industry on the application of subsection 29QC(1) to ensure that disclosure requirements appropriately aligned with APRA's reporting standards.
In December 2014, ASIC released Consultation Paper 227 Disclosure and reporting requirements for superannuation trustees: s29QC (CP 227). In CP 227, ASIC sought feedback on options proposed for dealing with the uncertainty about how to achieve consistency between the disclosure requirements under subsection 29QC(1) and the data that is required to be reported under APRA's reporting standards. CP 227 raised issues around the treatment of investment objectives, return targets and the treatment of asset allocation information. Industry were generally supportive of applying section 29QC to performance information, although there was some debate about how performance should be measured in terms of net returns and net investment returns.
Further, on 28 April 2015 APRA released amended superannuation reporting standards for industry consultation. These reporting standards were expected to take effect from 1 January 2016.
In these circumstances, ASIC considered it appropriate to again extend the exemption from the requirements in subsection 29QC(1) in order to provide industry with further time to consider and respond to APRA's revised reporting standards, particularly in relation to performance related information. ASIC Superannuation (Amendment) Instrument 2015/396 extended this exemption from the requirements of s29QC(1) until 1 January 2016.
In conjunction with this work, ASIC has also been engaged in extensive discussion and consultation with industry in respect of fee and cost disclosure for superannuation and managed investment products.
In this regard, ASIC Class Order [CO 14/1252] was released on 8 December 2014, and sought to revise some of the key definitions and disclosure obligations in Schedule 10 to the Corporations Regulations 2001 (Regulations).
Following the release of [CO 14/1252], ASIC consulted on revisions to Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements. In response to this consultation ASIC received feedback from industry indicating that amendments to [CO 14/1252] were necessary to address its complexity and a number of unintended consequences.
ASIC Corporations (Amendment and Repeal) Instrument 2015/876 was released on 24 November 2015 and sought to modify Schedule 10 to the Regulations to provide industry with greater clarity in disclosing fees and costs for superannuation and managed investment products. This instrument extended the commencement date of the fee and cost disclosure regime to 1 February 2017.
Industry feedback for both s29QC, and fees and costs, has indicated a strong desire for ASIC to align the commencement date of these regimes. ASIC considers this appropriate as the disclosure regimes are inter-related, and this approach will provide industry with greater clarity of their obligations, as well as synergies in implementing both regimes at the same time.
Further, the new requirements for Choice product dashboards are expected to start on 1 July 2016. ASIC anticipates that draft legislation and regulations in relation to dashboards will be released for consultation by Government shortly. CP 227 raised the possibility of requiring consistency between the elements of the MySuper product dashboard and other disclosure documents, such as shorter PDSs, or promotional material. Consequently, ASIC considers that a further delay until 1 February 2017 will provide time for the dashboard requirements to be settled, which may be beneficial in settling the policy position for the application of s29QC.
In light of this, ASIC has amended the commencement date of the subsection 29QC(1) disclosure obligations to align with those of the fee and cost disclosure regime, as modified by ASIC Class Order [CO 14/1252] and ASIC Corporations (Amendment and Repeal) Instrument 2015/876.
2. Purpose of the Instrument
The purpose of the Instrument is to extend the exemption for RSE licensees in [CO 14/541] from the disclosure requirement in subsection 29QC(1) of the SIS Act until 1 February 2017.
This will align the commencement of the subsection 29QC(1) disclosure obligations with those of the fee and cost disclosure regime, as modified by ASIC Class Order [CO 14/1252] and ASIC Corporations (Amendment and Repeal) Instrument 2015/876.
3. Operation of the Instrument
The Instrument amends [CO 14/541 so that the exemption for RSE licensees from the requirement in subsection 29QC(1) of the SIS Act continues until 1 February 2017.
4. Consultation
ASIC has previously engaged extensively with industry by way of roundtables and CP 227, and is currently seeking feedback in respect of a draft instrument to modify the application of s29QC. Industry feedback for both s29QC, and fees and costs, has consistently indicated a strong desire for ASIC to align the commencement of these disclosure regimes.
The s29QC consultation process has highlighted that industry participants remain concerned with their ability to meet the requirements of section 29QC in light of the ongoing uncertainty concerning its operation. Industry will benefit from additional time to consider ASIC guidance, as well as the synergies that arise out of aligning s29QC's commencement with that of the modified fee and cost disclosure regime.