The Australian Securities and Investments Commission (ASIC) has issued a new Class Order [CO 04/1574] Application form and cooling-off relief for certain transfers of members between financial products and interests within a superannuation fund to provide conditional relief from application form requirements and cooling-off rights for trustees of certain regulated superannuation funds in the circumstances of an ‘intra-fund transfer’.

Briefly, an intra-fund transfer is a transfer of fund members and their benefits between superannuation products within a regulated superannuation fund. The application form and cooling-off relief will permit members of funds to be transferred between products within a fund without the members’ consent, as part of the rationalisation of fund products. The particular circumstances of an intra-fund transfer and the conditions of the relief are outlined in the attachment to this information release.

[CO 04/1574] was developed in conjunction with the Australian Prudential Regulation Authority (APRA) and applies to approved trustees under Part 2 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) or any trustee holding an RSE licence under Part 2A of the SIS Act.

‘The class order relief provides assistance to superannuation fund trustees when making arrangements to consolidate or rationalise ‘legacy’ products or systems where these are part of a wider, single regulated superannuation fund,’ ASIC’s Director of Legal and Technical Operations, Financial Services Regulation, Mr John Price said.

‘Addressing legacy products and systems issues is a prudential priority in controlling operational risk,’ APRA’s General Manager, Specialised Institutions Division, Mr Ramani Venkatramani said.

The relief applies only where adequate disclosure is made to members prior to the intra-fund transfer. Under the class order, the members to be transferred must be given a significant event notice under s1017B of the Corporations Act 2001, and a Product Disclosure Statement for the new product they will acquire, at least 30 days before the intra-fund transfer occurs. These disclosure requirements are consistent with ASIC’s view that superannuation fund members cannot be transferred to other superannuation products without the consent of members.

The relief incorporates the ‘equivalent rights’ test. This test already applies under the SIS Regulations in relation to the transfer of members and their benefits between separate superannuation funds under a ‘successor fund’ mechanism implemented without the consent of the members. This requirement is subject to APRA oversight.

‘To safeguard superannuation fund members’ interests, it is envisaged that the ‘equivalent rights’ requirement in relation to intra-fund transfers will also be subject to APRA supervision under the required approved trustee or RSE licence conditions,’ Mr Venkatramani said.

‘The relief does not affect other requirements under the Corporations Act or the duties of superannuation trustees under either the general law of equity or under the SIS Act. In particular, the trust deed covenants in s52 of the SIS Act, and the requirements in relation to the adverse alteration of accrued benefits in the SIS Regulations overseen by APRA, are not affected,’ Mr Price added.

A copy of the class order is available from the ASIC website at www.asic.gov.au/co or by calling ASIC’s Infoline on 1300 300 630.

End of release

Download a copy of Class Order [CO 04/1574] Application form and cooling-off relief for certain transfers of members between financial products and interests within a superannuation fund (PDF file, 36 KB)

Attachment to IR 05-10: Background: ‘Intra-fund’ superannuation member benefit transfers

In summary, an ‘intra fund transfer’ is a transfer of a member and their benefits without the member’s consent that occurs between different superannuation products within a single regulated superannuation fund as:

and where