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January 10, 2014

ASIC acts on misleading super advertising

ASIC has announced that Media Super Limited has paid a $10,200 penalty to comply with an ASIC infringement notice after producing potentially misleading advertisements.

Media Super published the ads as a factsheet in September 2012. The factsheet titled ‘Self-managed super? You be the judge’, compared the costs and benefits of self-managed super funds with the Media Super fund. It appeared on Media Super’s website and was sent to all fund members.

ASIC was concerned that the factsheet inaccurately represented the costs and benefits of the Media Super funds compared to self-managed super funds.

The fact sheet omitted a component of Media Super’s fees.

Media Super corrected the error immediately after it was identified.

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Posted 10th January 2014 by David Jacobson in Corporations Act, Marketing, Superannuation

December 30, 2013

The regulatory schedule for 2014

2014 begins with some uncertainty: in addition to its legislation repealing the carbon tax and the mining tax, the Government has indicated it will be changing FOFA and conducting a Financial System Inquiry. Its charities changes have also been held up in the Senate.

It will also be "cleaning up" announced but unimplemented tax and superannuation changes. The Superannuation Guarantee charge percentage increase from 9.25% to 9.5% scheduled for 1 July 2014 has been postponed. The rate will remain at 9.25% until 30 June 2016.

But some significant changes will definitely commence in 2014, particularly the privacy changes commencing on 12 March.

1 January 2014

Anti-bullying law: anti-bullying legislation comes into effect on 1 January 2014 and will enable victims of workplace bullying to apply directly to the Fair Work Commission for an order that the bullying stop.

Small businesses will be apply to apply for External Dispute Resolution for disputes on loans up to $2 million

Risk management: New APRA standards for ADIs requiring a chief risk officer commence.

The Financial Claims Scheme single customer view commences.

The National Regulatory Scheme for Community Housing will also start in January.

The new statutory definition of charities will commence, notwithstanding the Government's proposed changes to the sector.

Other key dates

Personal Property Securities Act transition ends on 31 January 2014: pre-30 January 2012 securities must be registered on the PPS Register to retain priority.

National Gambling Reforms (including daily ATM limits in gambling venues) commence on 1 February 2014.

The Co-operatives National Law commences in NSW and Victoria on 3 March and later in the year in other States and Territories.

The Privacy Amendment Act commences on 12 March 2014 including changes to credit reporting.

Gender equality: from 1 April 2014 businesses with 100 or more employees will be required to lodge reports each year containing information relating to various gender equality indicators.

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Posted 30th December 2013 by David Jacobson in Charities, Compliance, Corporations Act, Financial Services, Privacy, Superannuation, Tax, Workplace

December 20, 2013

ATO clarifies SMSF limited recourse borrowing arrangements

The ATO has released a draft legislative instrument regarding trusts formed to hold property for limited recourse borrowing arrangements.

The legislative instrument will potentially exclude an investment in a related trust held by an SMSF as a required part of an Limited Recourse Borrowing Arrangement from being an in-house asset of the SMSF.

If formalised, the instrument will apply retrospectively, from 24 September 2007 – the date from which SMSF Limited Recourse Borrowing Arrangements were permitted.

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Posted 20th December 2013 by David Jacobson in Financial Services, Superannuation, Tax

ASIC relief on superannuation disclosure

ASIC has issued Class Order [CO 13/1534] Deferral of Stronger Super amendments in relation to PDS and periodic statement disclosure which provides for the following:

  • a change to the start date for compliance with new fees and costs disclosure arrangements: the class order extends the date of compliance from 31 December 2013 to 1 July 2014 for Product Disclosure Statements given on or after that date, and reporting periods on or after 1 July 2014 for periodic statements and aligns it with the commencement date for managed investment products, and
  • interim relief so that RSE licensees do not have to provide a hard copy of the product dashboard with the periodic statement: the class order provides interim relief from compliance with subregulation 7.9.20(1)(o), if a trustee includes in the periodic statement, or accompanies the periodic statement with, a website address for the latest product dashboard for the investment option. This also applies to periodic statements provided to members who are exiting the fund.

ASIC has also provided a no-action position for RSE licensees so that information about accrued default amounts does not need to be included in an exit statement.

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Posted 20th December 2013 by David Jacobson in Corporations Act, Superannuation

December 4, 2013

Disclosure on superannuation websites

ASIC has issued Consultation Paper 291 Keeping superannuation websites up to date which sets out options for public disclosure on websites of registrable superannuation entities (RSEs).

s29QB1 of the Supervision Industry (Supervision) Act 1993 (SIS Act) requires an RSE licensee to disclose on the RSE’s website:
(a) remuneration details of the RSE licensee’s executive officers or individual trustees; and
(b) other information and documents relating to the RSE and RSE licensee (e.g. the trust deed and proxy voting policies).

Section 29QB requires this information to be publicly available on the RSE’s website and kept up to date at all times—however, the legislation does not clarify what this means in practice. For example, should websites be updated on the day that the required information changes, or should they be updated within a specified number of days of such a change?(updating obligation), but the legislation does not say what this means.

ASIC's preferred option is to modify the law to give RSE licensees a ‘safe harbour’, so that if they update the RSE’s website within a certain time (generally, 14 days), they would be taken to comply with their updating obligation.

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Posted 4th December 2013 by David Jacobson in Superannuation, Web/Tech

November 29, 2013

Superannuation discussion paper released for comment

Treasury has released a discussion paper entitled 'Better regulation and governance, enhanced transparency and improved competition in superannuation' for public consultation .

The key issues raised in the paper are:

  • How best to ensure an appropriate provision for independent directors on superannuation trustee boards. Issues canvassed include how 'independence' could be defined and what could constitute optimal board composition.
  • How best to complete the outstanding aspects of the current regulatory regime, including:
    to what extent the choice product dashboard should reflect the MySuper product dashboard; and
    which model of portfolio holdings disclosure would best achieve an appropriate balance between improved transparency and compliance costs.
  • The best way to improve transparency and competition in the employee default superannuation funds market.

The paper also seeks views on a possible deferral of the commencement date of the MySuper transparency measures beyond 1 July 2014.

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Posted 29th November 2013 by David Jacobson in Corporate Governance, Financial Services, Superannuation

November 18, 2013

How hard is it to wear two hats?

There are many corporate positions that may be double hatted (depending on the company size): company secretary/general counsel, general counsel/chief compliance officer, CFO/risk officer, internal auditor/compliance officer.

But how practical is it for an employee to wear two hats at once?

The issue is whether the person can effectively carry out both functions.

For example, for ADIs, insurers and superannuation funds, APRA requires that a Chief Risk Officer be independent from business lines, the finance function and other revenue-generating capabilities.

Other positions may require direct access to the board (not just to report to the board) without a conflict of interest.

The issue is whether the double-hatted role will result in serious problems being overlooked or whether the dual roles interact well together.

For lawyers there are issues relating to liability and legal professional privilege:

In Shafron v Australian Securities and Investments Commission [2012] HCA 18 the High Court decided that Mr Shafron's responsibilities with James Hardie as company secretary and general counsel were indivisible and must be viewed as a composite whole.

In Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts (No. 2) [2007] FCA 1445, the Federal Court decided that it must not be assumed that all advice given by a lawyer employed in both legal and management positions in a company has the benefit of legal professional privilege if it cannot be proved they were acting in a legal (rather than a management) capacity when they gave the advice.

It should not be assumed that 2 positions which may appear to "fit" will work together in practice.

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Posted 18th November 2013 by David Jacobson in Compliance, Corporations Act, Financial Services, Insurance, Risk Management, Superannuation

November 8, 2013

Government tax and superannuation update

Treasurer Joe Hockey has announced how the Government will deal with 92 measures of announced but unlegislated tax and superannuation measures.

Of the 92 unlegislated and unresolved tax and superannuation changes, the Government will proceed with 18 initiatives. A further three initiatives will be significantly amended.

The Government will not proceed with seven initiatives.

Assistant Treasurer Arthur Sinodinos, with assistance from the Board of Taxation will undertake consultation with tax experts, including a number drawn from the Board's advisory panel over the next two weeks with a disposition not to proceed with the remaining 64 measures.

There will be legislated protection for any taxpayer who has self‑assessed with announced changes that the Government will not proceed with.

Taxpayers that have complied with previous announcements that will no longer proceed, and have paid additional taxation, will be entitled to a refund.

The 7 measures the Government will not proceed with include:

  • Self‑Education Expenses Cap of $2000
  • Change to Fringe Benefits Tax on cars
  • Tax on Superannuation Pensions above $100,000

The Government will proceed with Tobacco Tax Changes and increasing the non‑primary production income eligibility threshold for Farm Management Deposits from $65,000 to $100,000.

The Government has not yet considered changing the low value import threshold for imposition of GST.

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Posted 8th November 2013 by David Jacobson in Superannuation, Tax

APRA prudential practice guides for superannuation

The Australian Prudential Regulation Authority (APRA) has released eight final prudential practice guides (PPGs) for the superannuation industry.

The PPGs cover defined benefit matters, contributions and payments, investment governance, valuations and remuneration.

Existing superannuation PPGs on adequacy of resources, contribution and benefit accrual standards and payment standards have been updated.

A final remaining PPG, Prudential Practice Guide SPG 310 Audit and Related Matters, will be released before the end of 2013.

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Posted 8th November 2013 by David Jacobson in Financial Services, Superannuation

September 18, 2013

ASIC reviews quality of advice to SMSFs and costs

ASIC has released Consultation Paper 216 Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs (CP 216) containing ASIC’s proposals to impose specific disclosure obligations on advisers.

ASIC's recent review found that there is a need to improve the disclosure of information that may influence a decision to establish or switch to an SMSF including the need to:

  • warn clients that SMSFs do not have access to the compensation arrangements under the Superannuation Industry (Supervision) Act 1993 in the event of theft or fraud, and
  • explain other matters that may influence the client’s decision to set up an SMSF.

CP 216 also looks at the appropriate level of resources consumers should have before setting up an SMSF.

ASIC commissioned Rice Warner to examine the minimum cost-effective balance for SMSFs when compared with super funds regulated by the Australian Prudential Regulation Authority (APRA). CP 216 includes Rice Warner’s report: Costs of Operating SMSFs.

Rice Warner’s report also looks at the appropriate level of resources consumers should have before setting up an SMSF.

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Posted 18th September 2013 by admin in Corporations Act, Financial Services, Superannuation
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