Superannuation Alert - 25.09.14

Financial Services eBulletin - 25 September 2014

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

  • AUSTRAC has released Draft Guidance Note 14/2 for public consultation. The guidance note seeks to assist reporting entities, including trustees of superannuation funds, in understanding how the Document Verification Service (DVS) can be used to identify and verify individual customer and beneficial owner identities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). AUSTRAC is seeking comments on the draft guidance note and estimates of savings resulting from the use of DVS by 1 October 2014.

  • On 15 September 2014, ASIC superannuation senior manager Alex Purvis was reported as stating at the Australian Institute of Superannuation Trustees' Australian Superannuation Investment Conference that ASIC will be undertaking surveillance of superannuation trustees to ensure that they are meeting their obligations under section 29QB of the Superannuation Industry (Supervision) Act 1993 (Cth) to provide proper disclosure on their websites.

  • On 16 September 2014, ASIC announced a review of breach reporting by Australian financial services (AFS) licensees. This follows ASIC's receipt of a letter from the Institute of Internal Auditors Australia seeking guidance from ASIC about when an AFS licensee is required to report a breach under section 912D of the Corporations Act 2001 (Cth). In its response to the letter on 16 September 2014, ASIC confirms that the time period in which a breach must be reported starts on the day the AFS licensee becomes aware of a breach or likely breach that it considers could be significant, and that it considers that the AFS licensee becomes aware of a breach or likely breach when a person responsible for compliance at the relevant AFS licensee becomes aware of the breach. The announcement reports ASIC Deputy Chairman Peter Kell stating, "Under the Corporations Act 2001 (section 912D), AFS licensees must report significant breaches to ASIC as soon as practicable and in any case within 10 business days after becoming aware of a breach...To be clear, this means that a licensee should not wait until after it has completed a full investigation to satisfy itself whether or not the breach or likely breach is significant. Nor should the licensee wait until the breach or likely breach has been considered by its board of directors or by its internal or external legal advisers. If in doubt, err on the side of caution and report the breach to ASIC."

  • On 16 September 2014 ASIC released Report 408 - Review of the implementation of RG 148 Platforms that are managed investment schemes (September 2014). According the related media release, the report outlines ASIC's review of the implementation of the updated requirements in Regulatory Guide 148 - Platforms that are managed investment schemes (RG 148) and reminds platform operators of some important obligations, including managing conflicts of interest, timely breach reporting, managing investment government risk and compliance with corporate structure requirements.

  • On 17 September 2014, ASIC announced the results of two separate "financial advice industry engagement projects". The first project was an ASIC review of the implementation of the FOFA reforms by 60 AFS licensees. The findings are published in ASIC Report 407 - Review of the financial advice industry's implementation of the FOFA reforms. The second project involved ASIC visits to 35 newly licensed financial advice businesses in order to "proactively engage with [ASIC's] newer regulatory population, as well as assisting them to better comply with the AFS licensee obligations". Key findings of this project are set out in the ASIC announcement.

  • On 17 September 2014, APRA updated its Frequently Asked Questions (FAQs) to include the following new FAQ:

- FAQ 70: Can [a registrable superannuation entity (RSE)] licensee manage an operational risk reserve, for the purpose of meeting the [operational risk financial requirement] target amount, as a general ledger balancing item?

  • On 18 September 2014, ASIC Class Order [CO 14/923] was registered with the Federal Register of Legislative Instruments. The class order was issued following ASIC's response to submissions received on Consultation Paper 214 - Updated record-keeping obligations for AFS licensees. According to the related Explanatory Statement the Class Order modifies Division 3 of Part 7.6 of the Corporations Act, as it applies to all financial services licensees, to insert a new section 912G that imposes record-keeping requirements for AFS licensees when the licensee or their representative (including an advice provider) give personal advice to retail clients.

Further details can be found in ASIC's media release.

Further information

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