EXPLANATORY STATEMENT
ASIC SUPERANNUATION (Amendment) Instrument 2015/396
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 2015/396 (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] exempts 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.
On 28 April 2015, APRA released amended superannuation reporting standards for industry consultation. These reporting standards are expected to take effect from 1 January 2016.
In these circumstances, ASIC considers that a further deferral of subsection 29QC(1) is appropriate to provide industry with further time to consider and respond to APRA's revised reporting standards, particularly in relation to performance related information. In addition, industry will have further time to consider ASIC guidance and any amendments made in relation to the disclosure requirement in subsection 29QC(1).
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 January 2016.
This will provide further time for consideration of APRA's revised reporting standards and ASIC guidance issued in relation to the disclosure requirement in subsection 29QC(1) of the SIS Act.
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 January 2016.
4. Consultation
ASIC has consulted with the Department of Treasury and APRA. In particular, ASIC's consultation with APRA highlighted the need for a deferral to the commencement of section 29QC in light of the release of APRA's revised reporting standards.
Further, ASIC has engaged extensively with industry by way of roundtables and CP 227. These consultations have 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.
Overview
The ASIC Superannuation (Amendment) Instrument 2015/396 was enacted to address the need for a further deferral in the application of certain disclosure requirements under the Superannuation Industry (Supervision) Act 1993 (SIS Act). This instrument, issued by the Australian Securities and Investments Commission (ASIC) under section 335 of the SIS Act, aims to extend the exemption for Registrable Superannuation Entity (RSE) licensees from complying with the requirement to provide consistent information in relation to certain disclosures, as stipulated in subsection 29QC(1) of the SIS Act, until 1 January 2016. The policy objective behind this amendment is to provide industry with additional time to familiarise themselves with and respond to the revised reporting standards released by the Australian Prudential Regulation Authority (APRA) and to consider ASIC's guidance on the disclosure requirements. This extension is intended to alleviate the concerns of industry participants regarding the practical implementation of these requirements amidst ongoing uncertainty.
Scope and Application
The ASIC Superannuation (Amendment) Instrument 2015/396 amends the Superannuation Industry (Supervision) Act 1993 by extending the exemption for Registrable Superannuation Entity (RSE) licensees from the disclosure requirements under subsection 29QC(1) until 1 January 2016. This exemption was initially provided under ASIC Class Order [CO 14/541] to allow additional time for industry consultation and alignment with the Australian Prudential Regulation Authority's (APRA) reporting standards. The extension aims to give RSE licensees further time to consider APRA's revised reporting standards, which are expected to take effect from 1 January 2016, and ASIC's guidance on the disclosure requirements under subsection 29QC(1). This exemption applies specifically to RSE licensees, who are entities required to hold a licence to operate within the superannuation industry, and is intended to address industry concerns about the practical application of these disclosure requirements amidst ongoing uncertainties.
Key Provisions
The ASIC Superannuation (Amendment) Instrument 2015/396 amends the existing ASIC Class Order [CO 14/541], extending the exemption for Registrable Superannuation Entity (RSE) licensees from the disclosure requirement in subsection 29QC(1) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) until 1 January 2016. Originally, the requirement to provide consistent information to the Australian Prudential Regulation Authority (APRA) and other persons was to commence on 1 July 2013, but the exemption under [CO 14/541] extended this until 1 July 2015. The Instrument further extends this exemption until 1 January 2016, providing additional time for the industry to adapt to the changes. This extension is intended to allow RSE licensees to better align their disclosures with APRA’s reporting standards and to consider ASIC’s guidance on the application of subsection 29QC(1).
The Act imposes specific obligations on RSE licensees to ensure that the information they provide to APRA under reporting standards, if also provided to other parties, is calculated in the same manner. However, due to the exemption under the amended class order, RSE licensees are temporarily relieved from this obligation until 1 January 2016. This exemption aims to provide clarity and allow industry to adjust to new standards and guidance without facing immediate compliance pressures. The obligations for RSE licensees will resume from 1 January 2016, requiring them to provide consistent information in their disclosures.
Failure to comply with the provisions of the SIS Act, once the exemption period ends, could result in various civil or criminal consequences, depending on the nature and severity of the breach. While the specific penalties are not detailed in the Explanatory Statement, breaches of the SIS Act can generally result in significant fines, corrective actions, or other regulatory sanctions. The maximum penalties for contraventions of the SIS Act can include substantial monetary fines for corporations, and in cases of serious or repeated breaches, individuals involved may face criminal charges, including imprisonment. The precise penalties will depend on the specific breach and the discretion of the court or regulatory authority.