Issue 820, 19 August 2021
In this issue:
- Portfolio holdings disclosure: further consultation on regulations
- IDR standards and breach reporting: ‘reportable situations’ regulations
- Recontribution of COVID-19 early release amounts: administrative arrangements
Portfolio holdings disclosure: further consultation on regulations
In ASFA Action issue 817, we reported that the Government had made regulations in relation to the Your Future, Your Super (YFYS) and member outcomes reforms. Consultation on the YFYS regulations had also included draft regulations to support the portfolio holdings disclosure (PHD) regime, however the Government did not include PHD in the final YFYS regulations. Instead, it indicated it would undertake further consultation on the PHD regulations.
Treasury has now released a further exposure draft of regulations for PHD, for a brief consultation. Following feedback from stakeholders on the initial draft, these have been amended to:
- introduce a requirement that the information should be easily downloadable from the website of the fund in a delimited file format
- allow cash and bank bill investments to be aggregated by the relevant institution
- sub-divide infrastructure and property into directly held and unitised and require percentage ownership for directly held
- remove the requirement to disclose maturity dates and counterparty name for derivatives
- make it clear in the Explanatory Statement that, in addition to the mandatory disclosures, registrable superannuation entities (RSEs) are free to provide supplementary information regarding the portfolio holdings of the RSE’s products in a separate public disclosure.
If you have any feedback you would like ASFA to consider in relation to the draft regulations, please forward it to Fiona Galbraith by close of business Wednesday 25 August.
IDR standards and breach reporting: ‘reportable situations’ regulations
ASIC has registered a legislative instrument varying the situations in which failure to comply with the new internal dispute resolution (IDR) standards in Regulatory Guide RG 271 Internal Dispute Resolution will be automatically considered ‘significant’ for breach reporting purposes.
RG 271, which was published in July 2020, sets out new and enhanced IDR standards with effect from 5 October 2021 for financial firms including APRA-regulated superannuation funds. At the same time, ASIC registered ASIC Corporations, Credit and Superannuation (Internal Dispute Resolution) Instrument 2020/98 (IDR Standards Instrument). The latter approved RG 271 as IDR standards for the purposes of the Corporations Act 2001, specified particular aspects of RG 271 as ‘enforceable paragraphs’, and inserted new sub-section 912A(1)(g)(ia) into the Corporations Act. Compliance with the IDR standards was made an obligation under new sub-section 912A(1)(g)(ia) and non-compliance became a civil penalty provision. (See ASFA Action issues 768 and 769 for background on RG 271 and the IDR Standards Instrument.)
The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Response Act) recently amended the breach reporting rules in section 912D of the Corporations Act. In particular, the amendments impacted the reporting requirements for contraventions of civil penalty provisions, including those contained in subsection 912A(5A).
As a result of the Response Act, a contravention of subsection 912A(5A), arising from a failure by a licensee to comply with subparagraph 912A(1)(g)(ia) would be deemed to be a ‘reportable situation’ and therefore required to be reported to ASIC.
ASIC has now registered the ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2021/716 (Reportable Situations Instrument) to address this. The Reportable Situations Instrument specifically excludes a contravention of subsection 912A(5A) which arises from a failure to comply with subparagraph 912A(1)(g)(ia). This has the effect that such contraventions will no longer automatically meet the definition of a ‘reportable situation’ in section 912D and therefore will not necessarily attract an obligation to lodge a report.
The explanatory statement notes that the Reportable Situations Instrument “provides administrative relief in circumstances where strict compliance with the legal obligations imposed by primary legislation (as notionally modified by the IDR Standards Instrument) results in every failure to comply with any of the enumerated paragraphs in RG271 being automatically considered ‘significant’, and therefore a ‘reportable situation’.” Further:
“contraventions of the type identified in the Reportable Situations Instrument fit into the category of being largely minor, technical, or inadvertent in nature. Given that, and the frequency with which breach reports would need to be lodged (and relevant documents supplied) in relation to such breaches, there would be a large regulatory burden imposed if the breaches were considered automatically significant.
Furthermore, where more material breaches of these provisions occur, these breaches may be otherwise reportable under the test in subsection 912D(5) or the other limbs of the deemed significance test in subsection 912D(4) of the Corporations Act”.
The Instrument has effect for 3 years from the commencement of RG 271, to allow time for Parliament to consider amendments to the Corporations Act that would allow regulations to be made to give permanent effect to the exclusion.
Recontribution of COVID-19 early release amounts: administrative arrangements
The ATO has published some guidance for superannuation funds on how to administer contributions made under recent legislative amendments allowing individuals to make ‘COVID-19 re-contribution amounts’.
The re-contribution initiative, implemented via the Treasury Laws Amendment (More Flexible Superannuation) Act 2021, allows individuals who received a COVID-19 early release of superannuation amount to re-contribute up to that amount back into super without it counting towards their non-concessional contributions cap. Recontributions under this measure can be made between 1 July 2021 and 30 June 2030. (See ASFA Action issues 811, 810 and 809 for background.)
In ASFA Action issue 819 we reported that the ATO had released CRT Alert 008/2021, regarding the prescribed content for the approved form that must be completed by individuals who wish to use the initiative.
The ATO has now published CRT Alert 009/2021, providing information to help funds administer amounts made under the initiative.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
