Superannuation Alert 01.12.16
Financial Services eBulletin - 1 December 2016
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 23 November 2016, the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 (Cth) (Bill) was introduced into the House of Representatives. The Explanatory Memorandum provides that the Bill "makes amendments to the Corporations Act 2001 to raise the education, training, and ethical standards of financial advisers". The Bill introduces more onerous standards of education and development for financial advisers. Some of the new requirements for providers include: holding a degree qualification; passing an exam; undertaking continuous professional development; and complying with a Code of Ethics. The Bill provides transitional arrangements for existing providers to comply with the new standards.
- On 23 November 2016, ASIC approved the Financial Planning Association of Australia (FPA) Professional Ongoing Fees Code (the Code). Members of the FPA who implement the Code will no longer have to comply with the Future of Financial Advice opt-in requirement. The release from ASIC explains that the opt-in provisions require an Australian financial services licensee "who receives fees under an ongoing fee arrangement to provide personal financial product advice, to give the client a written renewal notice every two years which requires the client to opt-in to renew that fee arrangement." Relief from the requirement will be granted to licensees who meet certain requirements when entering ongoing fee arrangements.
- On 24 November 2016, the ATO published two draft Law Companion Guidelines providing extensive guidance in relation to aspects of the superannuation reforms:
- LCG 2016/D8: Transfer balance cap and transition-to-retirement reforms: transitional CGT relief for superannuation funds provides guidance as to how the Commissioner will apply the capital gains tax relief provisions in tranche two of the superannuation reforms. The companion explains that the object of the capital gains tax reforms "is to support asset reallocations or reapportionments in complying superannuation funds because members need to comply with the transfer balance cap or TRIS reforms commencing."
- LCG 2016/D9: Transfer balance cap provides guidance as to how the Commissioner will apply the transfer balance cap from its effective date of 1 July 2017. The companion outlines how the transfer balance cap will operate "for account based superannuation income stream products." It also provides specific guidance in relation to some new concepts, including:
- "a transfer balance account, including the general transfer balance cap, and your personal transfer balance cap;
- credits (increases) and debits (decreases) to your transfer balance account; and
- the consequences of your transfer balance account exceeding your transfer balance cap, resulting in an excess transfer balance".
The ATO has foreshadowed further guidance regarding capped defined benefit income streams, for which special rules apply. Comments on the draft Law Companion Guidelines are due by 8 December 2016.
- On 29 November 2016, ASIC issued a statement extending the transition period for compliance with updated fee and cost disclosure rules for product disclosure statements (PDSs) as a result of ASIC Class Order [CO 14/1252] and Regulatory Guide 97 (note: the revised ASIC Corporations (Amendment and Repeal) Instrument 2015/876 applies the transitional period set out in the original class order). The original compliance date was 1 February 2017, however, this update grants trustees and responsible entities an extension until 30 September 2017 under certain conditions. To take advantage of the time extension, issuers must notify ASIC in writing by 31 January 2017. Furthermore, issuers must provide ASIC with "information about the fees and costs that would be required to be included in the PDS had they complied with the updated fees and costs disclosure requirements" before 1 March 2017. The extension of time comes "in response to applications from industry associations which had raised concerns that information provided for some products by an earlier date may not be reliable and may not assist consumers in comparing fees and costs." ASIC Class Order [CO 14/1252] will be amended to give effect to the new transition period. ASIC notes that "[t]he extension of transition does not provide an exemption from the requirements that apply under the Corporations Regulations, unamended by [CO14/1252] or the requirement for the issuers not to make misleading or deceptive statements about their products".
- On 29 November 2016, the second and third tranches of the superannuation budget reforms received Royal Assent. The relevant Bills as passed are: Treasury Law Amendment (Fair and Sustainable Superannuation) Bill 2016 and Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016. The first tranche of the superannuation budget reforms, being the Superannuation (Objective) Bill 2016, has been referred to the Senate Economics Legislation Committee for inquiry and report by 14 February 2017.
Emilia Michael | Lawyer
+61 3 9269 9580
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