ASIC has granted interim relief to give trustees of legacy superannuation products further time to comply with some periodic statement disclosure requirements.

ASIC Class Order [CO 06/602] Transitional periodic statement relief for legacy superannuation products gives interim relief to trustees of legacy superannuation products from the:

• new additional transaction and management cost disclosures; and
• common fund expense disclosures,

that are required in periodic statements issued after 1 July 2006.

Trustees that rely on the relief will need to continue to comply with the relevant transaction, cost and expense disclosures that applied before 1 July 2006.

‘This relief will give trustees of legacy superannuation products further time in which to undertake work needed to upgrade legacy systems or migrate legacy superannuation products to modern systems’, ASIC’s Director of Policy and Research, Mr Mark Adams said.

‘ASIC understands that compliance with the new direct cost and common fund expense disclosure requirements may require significant changes to systems. For trustees of legacy superannuation products this may impose an unreasonable burden.

‘However, we would expect trustees to consider what is in the best interests of members when deciding whether to rely on the relief', Mr Adams said.

Trustees will have to notify ASIC if they intend relying on the extension of time under [CO 06/602], and:

• certify that the underlying records system is based on core software or technology that is at least ten years old; and
• certify that it would impose an unreasonable burden to provide the enhanced fee and common fund disclosures today.

A copy of [CO 06/602] can be obtained from the ASIC website via www.asic.gov.au/co or by calling the ASIC Infoline on 1300 300 630.

The class order will commence after it has been recorded on the Federal Register of Legislative Instruments (FRLI) in electronic form. The FRLI can be accessed at www.frli.gov.au.

Further background about the enhanced fee disclosure regulations and details of the relief provided under [CO 06/602] is included in the attachment to this information release.

End of release

Download:

• Class order [CO 06/602] Transitional periodic statement relief for legacy superannuation products
• Explanatory statement to class order

Attachment to Information Release IR 06-28

Background

The Corporations Regulations 2001 (Regulations) mandate enhanced disclosure of transactions, fees and costs in periodic statements for superannuation products from 1 July 2006.

• Regulation 7.9.60B requires a periodic statement to list and briefly describe all transactions in relation to the product during the reporting period.
• Part 3 of Schedule 10 to the Regulations requires periodic statements to include information about management costs not deducted directly from a member’s or product holder's account as well as specifying total fees paid during the relevant period covered by the periodic statement.

These new requirements were made in amending regulations issued in March 2005. The amending regulations are commonly known as the ‘enhanced fee disclosure regulations’. The explanatory statement to these regulations contemplated that ASIC would need to consider likely relief applications for legacy products.

The Regulations also require more precise disclosure of ‘common fund’ expenses attributable to individual members in periodic statements for superannuation products from 1 July 2006. Subparagraph 7.9.75(1)(b) requires periodic statements to disclose a member's share of any common fund expenses, fees and charges that have been deducted from the fund.

ASIC relief

ASIC Class Order [CO 06/602] gives trustees of legacy superannuation products a further two years to comply with enhanced disclosure of transaction, fees and costs in periodic statements.

The relief is available where a trustee gives a periodic statement for a superannuation product that:

• informs members who they can contact to obtain details about transactions, fees and costs as described in the enhanced fee disclosure regulations;
• alerts members that common fund expenses attributable to their interests in the superannuation product have been deducted and that further information can be obtained from the trustee (ie. as though subparagraph 7.9.75(1A) of the Regulations continued to apply);
• does not accept new applications for membership (other than where there is a payment split for family law purposes or contribution splitting); and
• relies on software or other technology that was substantially developed more than ten years ago.

In addition, the trustee must:

• notify ASIC in writing that it is relying on the relief; and
• certify in writing that:

1. the product is supported by an administration system which relies on software or other technology which was developed more than ten years ago; and
2. it would not be able to comply with the new transaction and management cost disclosure requirements and common fund expense disclosure requirements in periodic statements unless changes were made to the administration system; and
3. the system changes needed to comply with the new disclosure requirements (described in paragraph (b)) would impose a current unreasonable burden on the trustee; and

• take reasonable steps to ensure that it will be able to comply with the requirements (described in paragraph (b)) at the end of the two year transitional period.

ASIC expects trustees to consider what is in the best interests of members when deciding whether to rely on the relief.

What issuers need to do

To rely on ASIC’s relief, trustees will need to:

• identify which of its products (if any) are legacy superannuation products eligible to rely on the relief;
• make the certification required under Class Order [CO 06/602]. The certification need not be in any particular form and need not be lodged with ASIC. We expect that issuers would keep a copy of the certification for their records
• notify ASIC that they are relying on the relief, quoting form number FS87. Notifications can be sent to Australian Securities and Investments Commission, PO Box 4000, Gippsland Mail Centre, VIC 3841.