Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3)

Administered by Department of the Treasury

Legislation au F2009L01485 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Select Legislative Instrument 2009 No. 71

Issued by authority of the Minister for Superannuation
and Corporate Law

Superannuation Industry (Supervision) Act 1993

Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3)

Subsection 353(1) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) provides, in part, that the Governor‑General may make regulations prescribing matters required or permitted by the SIS Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the SIS Act.

The SIS Act provides for the prudent management of superannuation entities. The Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) are the core regulations considered essential to the operation of the SIS Act.

The purpose of the proposed Regulations is to make certain administrative decisions by the Australian Prudential Regulation Authority (APRA) with respect to APRA regulated funds and by the Commissioner of Taxation with respect to self managed superannuation funds subject to merits review by the Administrative Appeals Tribunal.  Merits review aims to ensure that all persons affected by a decision receive fair treatment.  It also improves the transparency of administrative decisions and, where regulators are seen to make consistent, well‑formulated decisions, should engender greater public confidence in the regulatory framework.

The Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008, which was enacted on 26 May 2008, provided for the expansion of merits review to certain decisions by APRA and the Commissioner of Taxation.  As a consequence of that amendment, and as foreshadowed in the Review of Prudential Decisions Discussion Paper in May 2007, changes are required to the SIS Regulations to ensure that appropriate administrative decisions made by APRA and the Commissioner of Taxation under the SIS Regulations are subject to merits review. 

The proposed Regulations commence the day after they are registered on the Federal Register of Legislative Instruments.  Details of the Regulations are set out in the Attachment.

The SIS Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.  The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Consultation on proposals affecting SIS Regulations initially occurred through a proposals paper, Streamlining Prudential Regulation: Response to ‘Rethinking Regulation’, released on 4 December 2006.  Further consultation took place through a subsequent consultation paper, Review of Prudential Decisions, released on 31 May 2007.  APRA and the ATO were subsequently consulted on the amendments to the SIS Regulations.

ATTACHMENT

Details of the Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3)

Regulation 1 specifies the name of the Regulations as the Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3)

Regulation 2 provides that these Regulations are taken to have commenced on the day after they are registered.

Regulation 3 provides that Schedule 1 amends the Superannuation Industry (Supervision) Regulations 1994.

Schedule 1 Amendments

Item 1 removes the definition of reviewable decision under regulation 1.03 and replaces it with a new definition.  The Regulator with respect to regulation 1.03 is the relevant Regulator that has the responsibility for administering the Regulations, being APRA or the Commissioner of Taxation.

The decisions that are subject to merits review under the current definition are renumbered and included in the new definition as follows:

•                 Current paragraph (a) is new paragraph (e) ‑ A decision of the Regulator to not determine the form of consent under subregulation 4.12(2), paragraph 6.27B(b) and 7A.16(8)(b);

•                 Current paragraph (bb) is new paragraph (p) ‑ A decision of the Regulator to specify a day on or before which an application is to be made under regulation 12.08;

•                 Current paragraph (c) is new paragraph (q) ‑ A decision of APRA refusing to approve an application to transfer to a PJFC (which is an amount specified in a notice by APRA under subsection 342 (2) of the Act) under subregulation 12.12 (2) and 12.13(2);

–               This paragraph has been reworded to clarify that a decision of APRA to refuse to approve the application is reviewable.

•                 Current paragraph (d) is new paragraph (r) ‑ A decision of APRA to revoke an approval of an application to transfer to a PJFC under regulation 12.14; and

•                 Current paragraph (e) is new paragraph (t) ‑ A decision of the Regulator to confirm or vary a reviewable decision under regulation 13.25.

–               This paragraph has been reworded to remove ‘revoke’ as revoking an unfavourable decision would be to the individuals benefit.

Item 1 expands the application of merits review under the SIS Regulations to:

•                 A decision of APRA refusing to approve a sum payable as a benefit under paragraph 1.05(2)(c) ‑ new paragraph (a);

•                 A decision of the Regulator to refuse to approve a sum payable as a benefit under paragraph 1.06(2)(c) ‑ new paragraph (b);

•                 A decision of the Regulator to refuse to approve the factors for converting pensions under subregulation 1.08(2) ‑ new paragraph (c);

•                 A decision of APRA to refuse to approve an arrangement in relation to the management and control of a regulated superannuation fund under paragraph 4.08A(2)(e) ‑ new paragraph (d);

•                 A decision of APRA to refuse to suspend or vary an obligation of a trustee’s obligation to roll over or transfer amounts under subregulation 6.37(6) ‑ new paragraph (f);

•                 A decision of the Regulator refusing to allow a longer period for rolling over or transferring the non member spouse’s interest under subparagraph 7A.03J(2)(a)(ii) ‑ new paragraph (g);

•                 A decision of the Regulator refusing to allow a longer period to pay a lump sum under paragraphs 7A.03K(2)(b) and 7A.13(7)(b) ‑ new paragraph (h);

•                 A decision of the Regulator refusing to allow a longer period for rolling over or transferring transferable benefits under subparagraph 7A.12(4)(a)(ii) ‑ new paragraph (i);

•                 A decision of the Regulator refusing to allow a longer period to allocate, rollover or transfer a non member spouse entitlements under paragraph 7A.16(3)(b) ‑ new paragraph (j);

•                 A decision of the Regulator to give a direction to the trustee to obtain a new or replacement funding and solvency certificate if it is in the prudential interest of the fund and in the best interest of members of the fund under subregulation 9.09(1A) ‑ new paragraph (k);

•                 A decision of the Regulator refusing to approve an actuary’s recommendation for a defined benefit fund under subregulation 9.24(2) ‑ new paragraph (l);

•                 A decision of the Regulator refusing to approve an actuary’s recommendation for an accumulation fund under subregulation 9.44(2) ‑ new paragraph (m);

•                 A decision of the Regulator refusing to approve a proposed element of an actuarial basis for calculation of value A of accrued benefits of a superannuation fund under subregulations 12.05(5) and (6) ‑ new paragraph (n);

•                 A decision of the Regulator refusing to approve a proposed element of an actuarial basis for calculation of value B of accrued benefits of a superannuation fund under subregulation 12.06(5) ‑ new paragraph (o); and

•                 A decision of the Regulator refusing to consent to an alteration of accrued benefits under subparagraphs 13.16(2)(a)(ii) and d(ii) ‑ new paragraph (s).

Overview

The Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3) were introduced to implement changes necessitated by the Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008, which expanded the scope of merits review to certain decisions made by the Australian Prudential Regulation Authority (APRA) and the Commissioner of Taxation regarding superannuation funds. These regulations aim to subject certain administrative decisions to review by the Administrative Appeals Tribunal, ensuring that affected individuals receive fair treatment and enhancing the transparency and public confidence in the regulatory framework. The regulations were enacted by the Minister for Superannuation and Corporate Law and commenced the day after their registration on the Federal Register of Legislative Instruments. The primary objective of these regulations is to align the administrative decisions made under the Superannuation Industry (Supervision) Regulations 1994 with the expanded scope of merits review as provided for in the 2008 Act. This legislative change ensures that decisions made by APRA and the Commissioner of Taxation, which were previously not subject to merits review, now can be reviewed to ensure they are consistent, well-formulated, and fair. The regulations redefine and expand the types of decisions that are subject to merits review, thereby improving the accountability and fairness of the regulatory process within the superannuation industry.

Scope and Application

The Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3) amend the Superannuation Industry (Supervision) Regulations 1994 to expand the scope of decisions by the Australian Prudential Regulation Authority (APRA) and the Commissioner of Taxation that are subject to merits review by the Administrative Appeals Tribunal (AAT). This legislation applies to decisions made by APRA concerning APRA-regulated superannuation funds and by the Commissioner of Taxation with respect to self-managed superannuation funds. The changes are intended to ensure that all affected persons receive fair treatment and to enhance the transparency and public confidence in the regulatory framework by subjecting certain administrative decisions to independent review. The amendments specify the decisions that are now subject to review, including refusals to approve sums payable as benefits, refusals to approve actuarial recommendations, and refusals to allow extensions for rolling over or transferring benefits. The Regulations do not specify any conditions that need to be met before the power to make them may be exercised and are a legislative instrument for the purposes of the Legislative Instruments Act 2003. The changes outlined in these Regulations are in response to the Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 and are part of broader efforts to streamline prudential regulation.

Key Provisions

The Superannuation Industry (Supervision) Amendment Regulations 2009 (No. 3) primarily serve to amend the existing Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) by expanding the scope of decisions subject to merits review by the Administrative Appeals Tribunal (AAT). Regulation 3 (as detailed in Schedule 1) redefines and broadens the scope of decisions that can be reviewed by the AAT, ensuring that certain administrative decisions made by the Australian Prudential Regulation Authority (APRA) and the Commissioner of Taxation with respect to superannuation funds are subject to this review process. This review ensures that decisions are fair and transparent, thereby enhancing public confidence in the regulatory framework. The Regulations do not impose any new conditions for their enactment, aligning with the legislative power granted under subsection 353(1) of the Superannuation Industry (Supervision) Act 1993 (SIS Act). These Regulations impose obligations on APRA and the Commissioner of Taxation to ensure that the decisions they make, as specified, are subject to review by the AAT. For example, APRA and the Commissioner must facilitate the process by which these decisions can be challenged, ensuring that the affected parties have an opportunity to present their case before the AAT. Additionally, these regulators must comply with the timelines and procedural requirements set out in the SIS Regulations for lodging and reviewing such decisions. These obligations are critical for maintaining the integrity and fairness of the superannuation regulatory system. The Regulations do not explicitly outline specific offences or penalties for non-compliance. However, failure to adhere to the procedural requirements and obligations could lead to judicial review or other legal challenges by affected parties. Non-compliance might result in decisions being overturned or remanded by the AAT, leading to potential financial and administrative repercussions for the regulators. Although the Regulations themselves do not stipulate maximum penalties, the broader legal framework within which these entities operate may include penalties for non-compliance with administrative processes and regulatory decisions.

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