Issue 600, 28 April 2016
In this issue:
- Portfolio holdings and choice dashboards: commencement dates confirmed
- Website disclosures by employer sponsored sub-plans: ASIC relief extended
- Generic financial calculators: ASIC guidance
- Financial advisers’ professional standards: proposed changes
Portfolio holdings and choice dashboards: commencement dates confirmed
ASIC has made a legislative instrument to resolve potential uncertainty over the commencement date for the choice product dashboard and portfolio holdings disclosure regimes.
In ASFA Action issue 596, we advised that the Government had introduced the Superannuation Legislation Amendment (Transparency Measures) Bill 2016 (Transparency Bill) into Parliament, to amend and defer trustee obligations in relation to portfolio holdings disclosure and choice product dashboards. Under the amendments contained in the Transparency Bill, trustees would be required to publish choice product dashboards from 1 July 2017, and the first six monthly reporting day for portfolio holdings disclosure would be 31 December 2017.
The Transparency Bill, along with all others then before the Parliament, lapsed when the Governor General formally suspended Parliament on 15 April 2016. The Transparency Bill was not reintroduced for consideration when Parliament resumed on 18 April 2016.
With the amendments to the legislative framework not in place, the regulations containing the detailed requirements for portfolio holdings and choice product dashboards also cannot be finalised. There were some concerns that this meant trustees’ obligations were to be determined based on the existing (unamended) provisions in the Corporations Act 2001, as varied by ASIC class order [CO 14/443] and a number of amendments to that class order. The last of those amendments, ASIC Corporations (Amendment No. 2) Instrument 2015/338 had extended the commencement date for the choice product dashboard regime to 1 July 2016 and the first reporting day for portfolio holdings disclosure to 31 December 2016 (see ASFA Action issue 564).
To resolve any potential uncertainty, ASIC has now registered the ASIC Corporations (Amendment) Instrument 2016/351. This instrument amends [CO 14/443] to defer the commencement date for the choice product dashboard obligations to 1 July 2017 and the first reporting day for portfolio holdings disclosure to 31 December 2017, to reflect the deferred commencement dates in the Transparency Bill. The instrument is intended to provide certainty in the event that the Transparency Bill is not reintroduced and passed before 1 July 2016.
Website disclosures by employer sponsored sub-plans: ASIC relief extended
ASIC has extended existing relief from the ‘systemic transparency’ disclosure provisions for standard employer-sponsored sub-plans, until 1 July 2017.
ASIC Class Order [CO 14/509], made in June 2014, provided relief from aspects of the ‘systemic transparency’ disclosure obligations in section 29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act) and regulations 2.37 and 2.38 of the Superannuation Industry (Supervision) Regulations 1994 . Those obligations require the licensee of a registrable superannuation entity (RSE) to make publicly available, and to keep up to date at all times, on the RSE’s website:
- details of executive officers and individual trustees, including their remuneration
- various information relating to the relevant superannuation fund, such as trust deeds and summaries of significant event notices given to members of the fund.
ASIC subsequently extended the start date for application of certain disclosures required by subsection 29QB for standard employer sponsored sub-plans until 1 July 2016, to provide further time for consideration of the commercial sensitivity issues that arise in the context of these types of sub-plans (see ASFA Action issues 543 and 564).
ASIC has now issued ASIC Superannuation (Amendment) Instrument 2016/345, to further extend the commencement date for standard employer-sponsored sub-plans until 1 July 2017.
This means that in respect of standard employer sponsored sub-plans, RSE documents such as product disclosure statements, trust deeds and governing rules, actuarial reports of defined benefit funds, annual reports and summaries of significant event notices do not have to be published on the RSE’s website until 1 July 2017, or may be redacted if the document relates to both the sub-plan and the RSE more generally. This deferral is intended to give RSE licensees enough time to transition to compliance with the full requirements of section 29QB of the SIS Act in relation to standard employer-sponsored sub-plans.
Generic financial calculators: ASIC guidance
In ASFA Action issue 598, we advised that ASIC had issued ASIC Corporations (Generic Calculators) Instrument 2016/207, to continue existing relief for providers of generic financial calculators (including superannuation calculators which do not relate to a specific financial product).
ASIC has now released updated regulatory guidance on its relief for generic financial calculators, via an update to section D of its Regulatory Guide 167 Licensing: Discretionary powers and new Report 477Response to submissions on CP 249 Remaking ASIC class order on generic financial calculators: [CO 05/1122].
In announcing the release of the guidance, ASIC has also highlighted one of the changes made to the conditions for the relief by Instrument 2016/207. This requires that if a financial calculator makes an estimate of a future return, it must be adjusted for inflation using an assumed rate of inflation of 2.5 per cent (the mid-point of the Reserve Bank of Australia’s target range for inflation over the cycle).
Financial advisers’ professional standards: proposed changes
The government has announced proposed changes to its measures to raise the education, training and ethical standards of the financial advice industry, and confirmed its commitment to establishing a standard setting body to administer the professional standards regime.
The government has specifically clarified that existing advisers will not be required to complete a bachelor’s degree, but instead reach ‘degree-equivalent status’ by undertaking flexible pathways as approved by the new standard setting body.
The transition time for existing advisers to pass the new exam and reach degree-equivalent status has also been extended, and the commencement date for the reforms has been deferred from 1 July 2017 to 1 January 2019. Existing advisers will now have until 1 January 2021 to pass the industry exam, prior to meeting degree-status education standards by 1 January 2024. This will now allow a total transition period of up to 5 years for existing advisers from the new, deferred commencement date of 1 January 2019.
An additional concession to potentially exclude ‘highly experienced advisers with exceptional skills and qualifications’ from the requirement to pass the industry exam is also now being considered by government, with views on these proposals being sought only by way of targeted consultation with industry.
The standard setting body is proposed to be constructed as a Commonwealth company initially, with a mandate to set minimum adviser qualifications, develop a code of ethics and set an adviser exam.
