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SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1998 NO. 193
EXPLANATORY MEMORANDUMStatutory rules 1998 No. 193
Minute No. 193 of 1998 - Treasurer
Subject - Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Regulations (Amendment)
The Superannuation Industry (Supervision) Act 1993 (the Act) and the Superannuation Industry (Supervision) Regulations make provision for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts.
Section 353 of the Act provides that the Governor-General may make Regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The proposed amendments:
* make amendments consequential on the Financial Sector Reform legislation which was recently enacted by:
- omitting references to the Insurance and Superannuation Commissioner,
which currently administers this Act, and replacing them with references
to the appropriate new regulator, either the Australian Securities and
Investments Commission (ASIC) or the Australian Prudential Regulation
Authority (APRA), or both, depending on the context (proposed
Regulations 3 - 7, 9 - 13, 15 - 30, 33, 34.4, 35 - 43, 44.2, 45, 52 - 57);
- omitting references to approved bank and substituting references to 'ADI'
(authorised deposit-taking institution under the amended Banking Act 1959)
(proposed Regulations 8 and 44. 1);
- omitting a reference to an 'approved bank or approved non-bank financial
institution' and substituting a reference to an 'ADI or an approved non
ADI' (proposed Regulations 46 - 48); and
- omitting regulations which have no function after the commencement of
the Financial Sector Reform legislation (proposed Regulations 49 - 5 1);
* modify the prescribed period that trustees of some superannuation entities have to lodge their annual returns with APRA after each year of income (proposed Regulation 3 1).
As indicated above, some of the proposed amendments to the regulations are consequential to the Financial Sector Reform legislation which was recently enacted. The Financial Sector Reform legislation is the Government's response to the report of the Financial System Inquiry (the Wallis Committee) and includes the Australian Prudential Regulation Authority Act 1998, the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 and the Financial Sector Reform (Consequential Amendments) Act 1998.
To the extent that it is relevant to the amendments to the Superannuation Industry (Supervision) Regulations, the Financial Sector Reform legislation:
* abolishes the Insurance and Superannuation Commissioner;
* establishes the Australian Prudential Regulation Authority to undertake the
prudential regulation of deposit-taking institutions, insurance companies and
superannuation entities; and
* enlarges the role of the Australian Securities Commission, which is renamed the
Australian Securities and Investments Commission, so that it oversees
consumer protection and market integrity in the financial sector (including
superannuation and insurance).
The role of the Insurance and Superannuation Commissioner is thus divided between the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission. In addition, these bodies will receive certain functions previously carried out by the Reserve Bank and the Australian Competition and Consumer Commission respectively.
Details of the proposed regulations are attached - Attachment A.
The Office of Regulation Review has advised that a regulation impact statement is not required in respect of these proposed regulation amendments.
The proposed regulations will commence on 1 July 1998.
The Minute recommends that the Regulations be made in the form proposed.
Authority: Section 353 of the Superannuation Industry (Supervision) Act 1993.
ATTACHMENT A
Proposed Regulation 1 - Commencement
Proposed Regulation 1 provides that the regulations commence on 1 July 1998.
Proposed Regulation 2 - Amendment
Proposed Regulation 2 provides that the Superannuation Industry (Supervision) Regulations are amended as set out in these regulations.
Proposed Regulation 3, 29, 30, 52, 53, 54 - Regulation 1.03, Part 11 (Heading), Regulations 11.01, 13.24, 13.25, 13.26 -
Current Regulations 1.03, 11.01, 13.24, 13.25 and 13.26 and the heading to Part 11 of the Regulations include references to the Insurance and Superannuation Commissioner who currently has regulatory responsibility for this Act.
These references are to functions which, under the Financial Sector Reform legislation, will be undertaken by the Australian Prudential Regulation Authority (APRA) or the Australian Securities and Investments Commission (ASIC). The appropriate regulator will be determined according to the circumstance, and which regulator has responsibility for the provision in that circumstance. The term Regulator is therefore used, which is defined in item 9 of Schedule 16 to the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 to mean APRA if the provision is administered by APRA, and ASIC if the provision is administered by ASIC.
Proposed Regulations 3, 29, 30, 52, 53 and 54 amend these references to refer instead to Regulator.
Proposed Regulations 4 - 7, 10, 11. 13, 15-17, 20-28, 33, 34.4, 35-43. 45, 55-57
Regulation 1.04, 1.05, 1.06, 1.08, 2.29 2.36, 2.64, 4.10, 4.11, 4.12, 6.19A, 6.22B,
6.27B, 9.19, 9.23, 9.24, 9.43, 9.44, 10.01, 11.07, 11.08(5), 12.01. 12.05, 12.06, 12.08,
12.11, 12,12, 12.13, 12.14, 12.15, 13.16, Schedule 1B, Schedule 1 and Schedule 3
Current Regulations 1.04, 1.05, 1.06, 1.08, 2.29, 2.36, 2.64, 4.10, 4.11, 4.12, 6.19A, 6.22B, 6.27B, 9.19, 9.23, 9.24, 9.43, 9.44, 10.01, 11.07, 11.08(5), 12.01, 12.05, 12.06, 12.08, 12.11, 12,12, 12.13, 12.14, 12.15, 13.16, Schedule 1B, Schedule 1 and Schedule 3 and include references to the Insurance and Superannuation Commissioner who currently has regulatory responsibility for this Act.
These references are to functions which, under the Financial Sector Reform legislation, will be undertaken by the Australian Prudential Regulation Authority (APRA).
Proposed Regulations 4-7, 10, 11, 13, 15-17, 20-28, 33, 35-43, 45 and 55-57 amend these references to refer instead to APRA.
Proposed Regulation 34.4 will amend subregulation 11.08(5) to refer to the fund number allocated under the Act, which will mean the number allocated by the Insurance and Superannuation Commissioner, until the commencement of APRA and, from that time, the number allocated by APRA.
Proposed Regulations 9, 12, 18, 19, 34.1, 34.2, 34.3, 44.2 - Regulations 2.19, 2.55, 5.01, 5.17. 11.08(3), 13.09(2) and subparagrgphs 11.08(4)(a)(vi) and 11.08(4)(b)(iv)
Current Regulations 2.19, 2.55, 5.01, 5.17, 11.08(3) and 13.09(2) and subparagraphs 11.08(4)(a)(vi) and 11.08(4)(b)(iv) include references to the Insurance and Superannuation Commissioner who currently has regulatory responsibility for this Act.
These references are to functions which, under the Financial Sector Reform legislation, will be undertaken by the Australian Securities and Investments Commission (ASIC).
Proposed Regulations 9, 12, 18, 34.134.2 and 34.3 and 44.2 amend these references to refer instead to ASIC.
Proposed Regulation 19 simply deletes the reference to the Insurance and Superannuation Commissioner because the regulation refers to reporting under regulation 11.08, which is allocated to ASIC, and so by deleting the reference to the Commissioner the function under regulation 5.17 is also transferred to ASIC.
Proposed Regulations 8 and 44.1 - Regulation 2.01 and 13.09
Current subregulation 2.01 includes a definition of a capital guaranteed fund, which refers to deposits with an approved bank. Current subregulation 13.09 refers to an approved bank in the definition of an Australian bank. Schedule 2 to the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 amends the Banking Act 1959. Among other things, the amendments introduce a new term of authorised deposit-taking institution (ADI) which is defined to mean a body corporate having an authority under the Act to carry on banking business in Australia. An ADI may include a bank or other non-bank financial institution.
Proposed Regulation 8 and 44.1 delete the references to an approved bank and substitute references to an ADI.
Proposed Regulation 14 - Regulation 3. 10 (Commission and brokerage)
Subregulation 3.10(3) of the current regulations provides that the trustee of a public offer entity must not make a payment of commission or brokerage to a person in respect of issuing an interest in the entity unless the person has certain qualifications. In the list are the holder of a dealers licence granted under Part 7.3 of the Corporations Law 'or under a corresponding law of a State or Territory' (paragraph 3.10(3)(a)) and 'the holder of an investment advisers licence granted under Part 7.3 of the Corporations Law or under a corresponding law of a State or Territory' (subparagraph 3.10(3)(d)(i)).
The words 'or under a corresponding law of a State or Territory' are not appropriate since the licence under the Corporations Law extends throughout Australia.
It is therefore proposed that the words quoted above be omitted.
Proposed Regulation 31 - Regulation 11.02 (Lodgement of annual returns superannuation entities)
Proposed Regulation 31 will modify the prescribed period that trustees of some superannuation entities have to lodge their annual returns with the Australian Prudential Regulation Authority (APRA) after each year of income. The purpose of the proposed amendment is to achieve a more uniform period for the lodgement of annual returns for all APRA regulated funds.
Trustees of all superannuation entities, other than excluded funds, will be required to lodge an annual return 4 months after the end of the year of income. The prescribed period for excluded funds will continue to be 9 months after the end of the year of income.
Proposed Regulation 32 - Regulation 11.03 (Period for giving information to APRA)
Proposed Regulation 32 makes a minor amendment to omit "the purposes of". The omission is a drafting matter, and has no effect.
Proposed Regulations 46. 47, 48 - Regulations 13.17, 13.17A and 13.17AA
Schedule 2 to the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 amends the Banking Act 1959. Among other things, the amendments introduce a new type of financial institution - an authorised deposit taking institution (ADI) - which is defined to mean a body corporate having an authority under the Act to carry on banking business in Australia. An ADI may include a bank or other non-bank financial institution.
Proposed Regulations 46, 47 and 48 delete the references to an approved bank or approved nonbank and substitute references to an ADI or an approved non-ADI respectively.
Proposed Regulations 49, 50 and 51 - Regulations 13.22A, 13.22B and 13.22C (Financial sector supervisory agencies, law enforcement agencies rid overseas financial sector supervisory agencies
Current Regulations 13.22A, 13.22B and 13.22C prescribe particular financial sector supervisory agencies, law enforcement agencies and overseas financial sector supervisory agencies for the purpose of section 346 of the Act (which relates to secrecy).
Section 346 of the Act has been repealed by Item 25, Schedule 16 of the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 because the Australian Securities and Investments Commission, which will have regulatory responsibility for this Act after 1 July 1998 is subject to secrecy and disclosure provisions in the Australian Securities and Investments Commission Act 1989.
Proposed Regulations 49 to 51 will omit Regulations 13.22A, 13.2B and 13.22C.