Financial Sector (Collection of Data) exemption No. 2 of 2010
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority
Financial Sector (Collection of Data) Act 2001 (the Act), subsection 16(1)
Under subsection 16(1) of the Act, APRA may, by legislative instrument, exempt a financial sector entity from the requirement to comply with all the requirements or specified requirements contained in applicable reporting standards.
ACT Super Management Pty Limited ABN 29 073 947 690 (ACT Super) is a ‘financial sector entity’ as defined by subsection 5(2) of the Act. Financial Sector (Collection of Data) exemption No. 2 of 2010 (the instrument) exempts ACT Super from the requirements contained in the reporting standards relating to quarterly returns specified in the Schedule in relation to certain registrable superannuation entities.
- Background
On 16 December 2009, APRA suspended Trio Capital Limited (Trio) and appointed ACT Super as the Acting Trustee of the following registrable superannuation entities:
- Astarra Superannuation Plan ABN 43 724 394 795;
- Astarra Personal Pension Plan ABN 74 351 127 106;
- Astarra Pooled Superannuation Trust ABN 71 340 939 814;
- My Retirement Plan ABN 23 732 008 457; and
- The Employers Federation of New South Wales Superannuation Plan ABN 31 061 350 115
(collectively, the RSEs).
On 16 December 2009, the Board of Trio appointed PPB as Administrators. On 22 June 2010, PPB were appointed as Liquidators of Trio.
On 21 October 2009, 16 December 2009 and 18 February 2010, APRA issued Directions to Freeze Assets to ACT Super under subsection 264(3) of the Superannuation Industry (Supervision) Act 1993.
Trio is the Responsible Entity (RE) of 13 managed investment schemes (MISs). Six of the MISs have significant direct or some exposure to impaired assets.
On 8 April 2010, PPB reported to creditors of Trio that the assets of the MISs with exposure to impaired or partially impaired assets are non- existent, difficult to value, or illiquid.
Two of the five RSEs, being Astarra Superannuation Plan and Astarra Personal Pension Plan, are relevant superannuation entities for the purposes of the following reporting standards:
- SRS 100.0 (2005) Statement of Financial Performance;
- SRS 110.0 (2005) Statement of Financial Position;
- SRS 110.1 (2005) Selected Disclosure of Investments;
- SRS 110.2 (2005) Derivative Financial Instruments; and
- SRS 120.0 (2005) Exposure Concentrations
(collectively, the reporting standards).
Given the exposure to the impaired and partially impaired MISs, ACT Super is unable to accurately value the investments made by Trio in its capacity as the trustee of the RSEs, and ACT Super is consequently unable to prepare the requisite reports under the reporting standards in respect of the two RSEs.
It is unlikely that excluding reporting data from ACT Super under the reporting standards with regards to the two RSEs would materially impact APRA’s data collection objectives, given the restrictions placed on the RSEs’ operations since late 2009 as outlined above and the uncertainty still surrounding the values of the RSEs’ assets.
2. Purpose of the instrument
The purpose of the instrument is to exempt ACT Super from all of the requirements relating to quarterly reporting in the reporting standards.
3. Consultation
APRA has been in consultation with ACT Super in relation to this issue.
Overview
The Financial Sector (Collection of Data) exemption No. 2 of 2010 was enacted to provide a legislative basis for exempting ACT Super Management Pty Limited from the requirement to comply with specified quarterly reporting standards under the Financial Sector (Collection of Data) Act 2001. This exemption was introduced in response to the financial difficulties of Trio Capital Limited, which had led to the suspension of its operations and the appointment of ACT Super as the Acting Trustee of certain registrable superannuation entities (RSEs). The inability of ACT Super to accurately value the investments made by Trio due to the exposure to impaired assets of the managed investment schemes (MISs) managed by Trio, made it impossible for ACT Super to prepare the necessary reports under the specified reporting standards. The Australian Prudential Regulation Authority (APRA) deemed that the exemption of ACT Super from these reporting requirements would not significantly impact APRA’s data collection objectives given the restricted operations and uncertainty surrounding the RSEs’ asset values since late 2009.
Scope and Application
The Financial Sector (Collection of Data) exemption No. 2 of 2010 applies to ACT Super Management Pty Limited, a financial sector entity as defined under the Financial Sector (Collection of Data) Act 2001. This exemption specifically addresses the requirements for quarterly reporting under certain reporting standards for two registrable superannuation entities, Astarra Superannuation Plan and Astarra Personal Pension Plan, which ACT Super is acting as the trustee for following the suspension of Trio Capital Limited by APRA. The exemption is in response to ACT Super's inability to accurately value the investments of these entities due to their exposure to impaired and partially impaired managed investment schemes, and the consequent difficulty in preparing the requisite financial reports. The exemption is intended to alleviate the burden on ACT Super while recognising the impracticality of fulfilling the reporting requirements given the current circumstances. This exemption applies within the jurisdictional reach of the Commonwealth of Australia and is subject to the provisions of the Act, which may be extended or further specified by subordinate instruments.
Key Provisions
The main operative sections of this legislation, Financial Sector (Collection of Data) exemption No. 2 of 2010, concern the exemption of ACT Super Management Pty Limited from certain reporting requirements. Section 16(1) of the Financial Sector (Collection of Data) Act 2001 allows the Australian Prudential Regulation Authority (APRA) to exempt financial sector entities from specific reporting standards, and in this case, APRA has exercised that power to exempt ACT Super from the requirements of the reporting standards related to quarterly returns for certain registrable superannuation entities (RSEs). The instrument is designed to exclude ACT Super from the obligations associated with preparing and submitting the required reports under the specified reporting standards (section 2).
The obligations imposed by this Act on ACT Super primarily concern the suspension of certain reporting duties. Under the instrument, ACT Super is exempted from the necessity to comply with the reporting standards that mandate quarterly returns, specifically those pertaining to Astarra Superannuation Plan and Astarra Personal Pension Plan. Given the challenging circumstances involving Trio Capital Limited, which has been suspended and liquidated, and the exposure to impaired and partially impaired assets, ACT Super is unable to accurately value the investments and prepare the requisite reports. This exemption is intended to reflect the operational restrictions placed on the RSEs since late 2009 and the ongoing uncertainty regarding the asset values of these entities.
In terms of potential offences, penalties, or consequences, the Act itself does not detail specific offences or penalties related to this exemption. However, any breach of the reporting standards from which ACT Super is exempted could potentially lead to enforcement actions under the Financial Sector (Collection of Data) Act 2001 or other relevant legislation. Penalties for non-compliance with such standards could include significant fines and legal action. The exemption provided by this instrument is intended to mitigate the immediate compliance burden on ACT Super, allowing APRA to continue monitoring the financial sector while acknowledging the current impracticality of precise reporting under the specified standards.