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Issue 613, 30 November 2016 

In this issue: 

 

Successor fund transfers: draft APRA guidance 

APRA has released for consultation draft guidance on successor fund transfers and wind-ups for APRA-regulated superannuation trustees. A successor fund transfer (SFT) is a transfer of the members in a superannuation fund to a different fund (successor fund). 

When finalised, draft Prudential Practice Guide SPG 227 Successor Fund Transfers and Wind-ups will replace previous APRA guidance on SFTs and wind-ups. Importantly, it includes new guidance in the key areas of: 

The consultation will close on 17 February 2017. APRA intends to finalise SPG 227 by mid-2017. 

If you have any comments you would like ASFA to consider including in our submission to APRA, please forward them to Julia Stannard by close of business Friday, 3 February. 

 

Fees and costs disclosure: ASIC grants extension 

ASIC has announced a conditional extension of fee and cost disclosure requirements for product disclosure statements (PDSs) issued by trustees of superannuation funds and responsible entities of managed investment schemes (Issuers). 

In response to a joint application for relief made by ASFA, AIST, FSC and ISA, ASIC has written to the associations indicating that it is prepared to extend the transitional period for Issuers to comply with the requirements of Class Order [CO 14/1252] and updated Regulatory Guide 97 (RG 97) with respect to PDSs, from 1 February 2017 until 30 September 2017. 

ASIC has also now issued a media release announcing the extension. 

Issuers who have not opted in to compliance with the current version of [CO 14/1252] by 1 February 2017 and want to take advantage of this transitional relief will, as a condition of the relief, be required to: 

ASIC has indicated it will be amending [CO 14/1252] shortly to give effect to this decision. It will also publish instructions for the notification of information, including the form to be used to provide the information to ASIC. 

ASIC has indicated it does not intend that the information provided will be for publication, however, ASIC may use it to check that Issuers are taking reasonable steps towards compliance and to identify whether it may indicate any likely non-compliance in the expected disclosures. ASIC will not consider taking any enforcement action unless they identify the Issuer is intentionally providing information that is non-complying, has failed to take reasonable care, or has not taken reasonable steps since the announcement of the extension. ASIC may also consider publishing a report on the information provided, without identifying information about any particular Issuer. 

ASIC has stated that this extension will be final and it will consider its approach to facilitative compliance during the extended transition period. 

In the application for relief the four industry associations undertook to provide ASIC with detailed feedback on implementation uncertainty and issues by 1 February 2017 and to work collaboratively to produce cross industry guidance. 

If you have any uncertainties or issues with implementation you would like ASFA to raise with ASIC and/or to be addressed in the industry guidance, please forward them to Fiona Galbraith. 

 

Budget superannuation changes: bills passed 

The bills to implement the superannuation changes announced in the government’s May 2016 Budget have been passed by Parliament. 

The Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 were passed by Parliament on 23 November without amendment, and now await Royal Assent. See ASFA Action issues 612 and 601 for more detail on the reforms. 

 

Departing Australia superannuation payments: tax changes passed 

The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 has been passed by Parliament without amendment. The Bill increases the tax that must be withheld from a departing Australia superannuation payment (DASP) made to a working holiday maker. 

A DASP is a superannuation benefit paid to a temporary resident of Australia, once they have departed Australia and their visa has expired or been cancelled. A ‘working holiday maker’ is defined as an individual who holds one of a number of specific visa types. The amendments will not apply to payment of a DASP if the recipient was not a working holiday maker. See ASFA Action issue 611 for further details on the amendments. 

 

PDS disclosure: relief for non-materially adverse updates extended 

ASIC has remade existing relief allowing product providers to make non-materially adverse updates to a PDS via a facility such as their website, rather than reissuing the PDS. 

The relief, currently provided by Class Order [CO 03/237] Updated information in Product Disclosure Statements, was due to expire on 1 April 2017. ASIC has now made ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055 to continue the relief. 

[CO 03/237] set out a number of conditions that must be satisfied to take advantage of the relief, and these will continue to apply under Instrument 2016/1055. 

ASIC has also made ASIC Corporations (Repeal) Instrument 2016/1053, to repeal [CO 03/237]. 

 

Financial adviser professional standards: bill introduced 

The government has introduced a Bill into Parliament to implement its proposed reforms to financial adviser professional standards. 

The Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016, introduced into the House of Representatives on 23 November, proposes new education requirements and an ongoing professional development element mandatory for new and existing financial advisers. If enacted, the reforms will also enhance the supervisory requirements for new advisers, introduce an exam to represent a common benchmark, and prescribe a code of ethics for the industry. 

Announcing the introduction of the Bill, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer highlighted that “the current requirements have allowed some financial advisers to become qualified to provide advice to retail consumers after only four days of training”. Commencing 1 January, 2019 with a transitional period extending out to 1 January 2024 for existing advisers, there will be a requirement for advisers to hold a degree equivalent qualification. 

A new independent professional standards body, funded by industry, will be established as a Commonwealth company to administer these reforms. 

 

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