House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Ralph Willis, MP)

SUPERANNUATION INDUSTRY (SUPERVISION) AMENDMENT BILL 1995

GENERAL OUTLINE AND MAIN PURPOSE OF THE BILL

The Bill will amend the Superannuation Industry (Supervision) Act 1993 (the 'SIS Act'), the

Superannuation (Resolution of Complaints) Act 1993 (the 'SRC Act'), the Superannuation Entities (Taxation) Act 1987 (the 'SET Act'), the Insurance Act 1973 and the Life Insurance Act 1995.

The Bill has four main purposes:

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expanding the jurisdiction and improving the effectiveness of the Superannuation Complaints Tribunal;

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transferring various modification orders made by the Insurance and Superannuation Commissioner (the Commissioner) into the body of the SIS Act;

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requiring audits of superannuation entities to cover compliance with certain provisions of the SIS Act and the Regulations;

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making other miscellaneous amendments to the SIS Act, the SRC Act and the SET Act, primarily aimed at improving the effectiveness and efficiency of those Acts and the system of prudential supervision of the superannuation industry.

Summary of major SIS Act amendments

The Bill will make the following amendments to the SIS Act:

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amend the definition of 'independent director' in the Act so that a director appointed to the board of a corporate trustee (where the corporate trustee is also an employer-sponsor of the fund) is not regarded as an associate of the employer-sponsor simply because of the director's appointment to the board [replaces Temporary Modification Declaration No. 9 issued by the Commissioner];

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exempt certain funds (generally those funds where the members have a close association with each other or the trustee) with less than 5 members from being a public offer superannuation fund [replaces Temporary Modification Declaration No. 7 issued by the Commissioner];

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allow the Commissioner to impose conditions when declaring a fund not to be a public offer fund;

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allow the Commissioner to vary the requirements which apply to approved trustees of public offer entities [replaces Temporary Modification Declarations Nos. 4 and 17 issued the Commissioner];

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amend section 36 so that copies of audit certificates, rather than originals, have to be provided to the Commissioner when an annual return is lodged [replaces Temporary Modification Declaration No. 15 issued by the Commissioner];

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allow an approved deposit fund to become a regulated superannuation fund without losing its taxation concessions [replaces Temporary Modification Declaration No. 18 issued by the Commissioner];

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amend section 62 (the 'sole purpose test') to make it clear that superannuation funds do not have to provide the same types of benefits to all members;

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requiring persons other than trustees or insurers who have responsibility for determining the existence and extent of total and permanent disablement and are joined to a disability complaint by the Superannuation Complaints Tribunal (the Tribunal) to comply with the Tribunal determinations. This will enable the Commissioner to obtain injunctions from the Federal Court, or the Supreme Court of a State or Territory, in the event of non-compliance with such a determination;

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amend Part 8 (in house asset rules) to allow the Commissioner to determine a person to be a standard employer-sponsor for the purposes of Part 8 (and thus restrict fund investments in that person);

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amend the equal representation rules to provide for transitional rules when a fund changes in size from having less than 5 members to 5 or more members;

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allow a trustee who is an employer-sponsor of a fund to be considered an independent trustee in certain circumstances [replaces Modification Declaration No. 1 issued by the Commissioner];

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amend section 101 of the SIS Act so that those persons who can complain to the Tribunal under section 14 of the SRC Act have the right to complain to the trustee under section 101 of the SIS Act;

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require that all investments by superannuation entities are maintained on an arms length basis;

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provide that a statement of cash flows must be prepared for superannuation entities and allow auditor's reports to relate to more than the 'accounts and statements' currently referred to in Part 13 [replaces Temporary Modification Declaration No. 13 issued by the Commissioner];

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require the auditor's report to include the auditor's opinion on the compliance of the entity with specified provisions of the SIS Act and the Regulations;

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amend section 117 so that the restrictions on payments from funds to standard employer- sponsors also apply to former standard employer-sponsor funds and in respect of former standard employer-sponsors;

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amend section 117 so that the requirements for actuarial certification and trustee satisfaction that a payment to a standard employer-sponsor is reasonable apply irrespective of the fund's trustee structure;

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prohibit 'disqualified persons' from being 'responsible officers' of bodies corporate which are trustees, investment managers or custodians of superannuation entities;

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allow the Commissioner to waive, where it is appropriate to do so, the disqualified persons provisions applying to trustees, responsible officers of trustees, investment managers and custodians [replaces Temporary Modification Declaration No. 14];

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clarify the circumstances in which an auditor may be disqualified and in which an auditor or actuary must tell the trustee if they believe that there is a contravention of the Act or that the financial position of the entity is, or may become, unsatisfactory;

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allow the Commissioner to refer an actuary or auditor to a professional body for disciplinary action;

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expand the ability of an inspector to require assistance/information from persons so they can seek assistance from former 'relevant persons' (such as the former trustee or former auditor) as well as current relevant persons, and other persons who may be able to assist an inspector in any investigation of an entity;

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make the SIS Act consistent with terminology relating to official management used in Part 5.3A of the Corporations Law;

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amend section 313 to allow the Commissioner to make an application to the Court for an order to be made against a trustee for the protection of beneficiaries, without the need for an investigation, prosecution or civil proceeding to have begun;

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amend the definition of superannuation standards officer and section 346, regarding the role of the Australian Bureau of Statistics in collecting survey information;

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provide that a trustee that pays certain benefits to a bankruptcy trustee in the event of the member's bankruptcy will not breach the Act.

Summary of major SRC Act amendments

The Bill will make the following amendments to the SRC Act:

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enable the Tribunal to review and make determinations in respect of insurer decisions relating to death and disability benefits provided through regulated superannuation funds;

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enable the Tribunal to provide appropriate remedies (eg, cancellation or variation of the policy or repayment of moneys with interest) where it determines that the decision of the trustee to admit a person as a member of the fund (after the date of Royal Assent) where that member is covered by a life policy maintained by the trustee for the purposes of the fund was unfair or unreasonable (conduct by an insurer or representative of the insurer will be relevant for the Tribunal in making its determination in this regard);

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enable the Tribunal to review life office conduct and decisions in relation to the sale and management of superannuation related-annuity products acquired after Royal Assent;

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allow the Tribunal to review decisions as to whether and to what extent a person is totally and permanently disabled that are made by certain persons other than a trustee or insurer;

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exclude disability complaints where more than one year has elapsed since the decision to which the complaint relates, or where the trustee decision was taken before 1 November 1994, or where a person fails to lodge a claim for a disability benefit with the trustees within one year of permanently ceasing employment due to disability;

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amend section 22 of the SRC Act to remove the requirement for the Tribunal to establish that a complaint has been dealt with 'adequately' by the other complaint handling body;

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amend section 23 of the SRC Act so that a person with a disability can only be represented by an agent where the disability is of a kind that makes it necessary for the person to be represented by an agent and so that bodies corporate (like complainants) cannot as a matter of course have agent representation at the Tribunal;

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clarify that certain provisions relating to complaints about benefit payments, only apply to complaints about death benefit payments;

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where a complaint has been made in relation to a death benefit payment, require other persons who have an interest in the outcome of a complaint to be notified and given the opportunity to become a party to the complaint;

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allow the appointment of a Deputy Chairperson and two additional part time members to assist the Tribunal in dealing with the increased volume and complexity of complaints that is expected to occur following these amendments.

Amendment to the SET Act

The Bill will make a minor technical change to this Act to correct a drafting error.

Amendments to the Insurance Act 1973

The Bill will make amendments to the Insurance Act 1973 requiring general insurance companies to comply with determinations of the Tribunal and enabling the Commissioner to apply to the Federal Court for an injunction in the event of non-compliance with such a determination.

Amendments to the Life Insurance Act 1995

The Bill will make an amendment to the Life Insurance Act 1995 requiring life offices to comply with determinations of the Tribunal. The Commissioner will be able to apply to the Federal Court for an injunction under section 235 of the Life Insurance Act 1995, in the event of non-compliance with such a determination.

FINANCIAL IMPACT STATEMENT

The proposed amendments provide for the creation of a deputy chairperson and two part time

members of the Superannuation Complaints Tribunal. In a full year, the cost of these positions is estimated to be about $270,000, of which about $223,000 is salary or salary related costs.

In addition , a resource bid will be brought forward for consultation as required with the Department of Finance, in the additional estimates process. The full year cost of the bid is expected to be of the order of $500,000, of which $340,000 would be for salary or salary related costs.

Further 'one-off' costs, including a new case management system, would be a further $210,000.

EXPLANATORY NOTES ON THE SUPERANNUATION INDUSTRY (SUPERVISION) LEGISLATION AMENDMENT BILL 1995

Clause 1 - Short Title

1. Self explanatory.

Clause 2 - Commencement

2. Subclause (1) provides that sections 1, 2 and 3, subsection 4(1), section 5, Schedules 1 and 2, items 1, 6, 10, 22, 23, 24, 25, 26, 27, 30, 31, 32, 33, 71, 72, 73, 74, 75, and 86 of Schedule 4 and items 1 to 7, 10 to 12, 25 to 71, 73 to 78, paragraphs (a), (b) and (c) of item 95, paragraphs (a) and (b) of item 96 and items 97 to 102 of Schedule 5 commence on Royal Assent.

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Subclause (2) provides that subsection 4(3), Schedule 3 and items 3, 4, 8, 9, 14, 15, 16, 17, 18, 19, 20, 21, 76, 82, and 85 of Schedule 4 commence on the later of Royal Assent, or on Royal Assent of the Taxation Laws Amendment Act (No 2) 1995. The reason for this is that these amendments are related to amendments proposed to be made in the Taxation Laws Amendment Bill (No 2) 1995.

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Subclause (3) provides that subsection 4(2) and the remaining items of Schedule 4 commence 28 days after Royal Assent.

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Subclause (4) provides that the remaining items of Schedule 5 commence on a date to be fixed by Proclamation.

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Subclause (5) provides that the items referred to in subclause (4) commence 6 months after Royal Assent, if they have not yet commenced by Proclamation.

Clause 3 - Termination of Modification Declaration No. 1

3. The Bill will insert (refer item 32 of Schedule 4) into the SIS Act, provisions which will make Modification Declaration No. 1 made by the Insurance and Superannuation Commissioner (the Commissioner) unnecessary. Consequently, this clause provides for the effective revocation of Modification Declaration No. 1 from immediately before the date the new provisions commence (which will be on the Bill receiving Royal Assent).

Clause 4 - Termination of Temporary Modification Declarations

4. The Bill will insert (refer items 10, 13 to 22, 24, 39 to 42 and 48 to 52 of Schedule 4) into the SIS Act, provisions which will make Temporary Modification Declarations Nos. 4, 7, 9, 13, 14, 15, 17, and 18 made by the Commissioner unnecessary. Consequently, this clause provides for the effective revocation of Temporary Modification Declarations Nos. 4, 7, 9, 13, 14, 15, 17, and 18.

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Subclause (1) provides for the effective revocation of Temporary Modification Declarations Nos. 9, 15 and 18 from the date the related new provisions commence (which will be Royal Assent).

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Subclause (2) provides for the effective revocation of Temporary Modification Declarations Nos. 7, 13 and 14 from the date the related new provisions commence (which will be 28 days after Royal Assent).

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Subclause (3) provides for the effective revocation of Temporary Modification Declaration Nos. 4 and 17 from either Royal Assent of this Bill or Royal Assent of the Taxation Laws Amendment Act (No. 2) 1995, whichever is later.

Clause 5 - Schedules

5. Self explanatory.

SCHEDULE 1 AMENDMENTS TO THE INSURANCE ACT 1973

Item 1 - After section 129B

6. This item inserts after section 129B new sections 129C and 129D. These sections have been inserted as a consequence of amendments to the Superannuation (Resolutions of Complaints) Act 1993 (the 'SRC Act') which enable the decisions of bodies corporate authorised to carry on insurance business under the Insurance Act 1973 ('general insurance companies') relating to the payment of death or disability benefits by trustees of regulated superannuation funds to be subject to review by the Superannuation Complaints Tribunal ('the Tribunal'). The sections provide for a scheme of enforcement of Tribunal determinations against general insurance companies which is consistent with the scheme which applies to trustees of superannuation funds and approved deposit funds under the Superannuation Industry (Supervision) Act 1993.

7. Section 129C requires general insurance companies that have been joined as a party to a complaint about a disability benefit to comply with any determination of the Tribunal made in respect of that company. Section 129D provides, in effect, that the Insurance and Superannuation Commissioner may apply to the Federal Court for an injunction against a general insurance company where it has engaged, is engaging, or proposes to engage, in any conduct in contravention of section 129C. Subsection 129D(1) empowers the Federal Court to grant such an injunction either restraining the general insurance company from engaging in the conduct or requiring the body corporate to do a particular act.

SCHEDULE 2 AMENDMENTS TO THE LIFE INSURANCE ACT 1995

Item 1 - After Division 3 of Part 7

8. This item inserts after Division 3 a new Division 3A. This Division has been inserted as a consequence of amendments to the Superannuation (Resolution of Complaints) Act 1993 (the 'SRC Act') which enable the decisions of life companies relating to the payment of death or disability benefits by the trustees of regulated superannuation funds and the conduct and decisions of life companies in relation to the sale and management of superannuation-related annuity products to be subject to review by the Superannuation Complaints Tribunal (the 'Tribunal') and for the Tribunal to issue certain remedies in respect of trustee decisions to admit a person as members of regulated superannuation funds where the person is covered by a life policy or policies maintained by the trustee for the purposes of the fund which affect life offices. The Division provides for a scheme of enforcement of Tribunal determinations against life companies which is consistent with that which applies to trustees of superannuation funds and approved deposit funds under the Superannuation Industry (Supervision) Act 1993.

9. Section 151 A of new Division 3A requires life companies that have been joined as a party to a complaint under sections 14 or 14A, or who are a party to a complaint under sections 15A or 15B of the SRC Act, to comply with any determination of the Tribunal made in respect of that company. If a life company contravenes this provision, then the Insurance and Superannuation Commissioner can apply to the Federal Court under section 235 of the Life Insurance Act 1995 for an injunction. Section 235 of the Act effectively empowers the Federal Court to grant an injunction either restraining the life company from contravening section 151A or requiring the life company to do a particular act.

SCHEDULE 3 AMENDMENTS OF THE SUPERANNUATION ENTITIES (TAXATION) ACT 1987

Item 1 - Section 15DAA (definition of levy month)

10. This item amends subsection 15DAA of the Superannuation Entities (Taxation) Act 1987 (the SET Act) by deleting the definition of 'levy month'. This definition is no longer necessary given amendments to be made to the SET Act by the Taxation Laws Amendment Bill No 2 1995.

SCHEDULE 4 AMENDMENTS OF THE SUPERANNUATION INDUSTRY (SUPERVISION) ACT 1993

Item 1 - Section 10 (definition of independent director)

11. This item amends section 10 of the SIS Act to include at the end of the definition of 'independent director' a note. This note alerts the reader to the new subsection 10(2), inserted by item 10, which sets out the circumstances in which a director of a corporate trustee of a fund is not taken to be an associate of an employer-sponsor of the fund.

Item 2 - Section 10 (after paragraph (a) of the definition of reviewable decision)

12. This item inserts after paragraph (a) of the definition of 'reviewable decision' in section 10 of the SIS Act paragraphs (aa) and (ab). New paragraph (aa) is necessary to include as a reviewable decision, a decision by the Insurance and Superannuation Commissioner (the Commissioner) (under new subsection 18(7A) - refer item 12) to make a declaration under subsection 18(7) subject to conditions.

13. New paragraph (ab) is necessary to include as a reviewable decision, a decision by the Commissioner (under new subsection 18(7C) - refer item 12) to revoke a declaration under subsection 18(7).

Item 3 - Section 10 (after paragraph (b) of the definition of reviewable decision)

14. This item inserts after paragraph (b) of the definition of 'reviewable decision' in section 10 of the SIS Act paragraph (ba). This amendment is necessary to include as a reviewable decision, a decision by the Commissioner (under new subsection 24(2) - refer item 15) to treat an application for approved trustee status as withdrawn.

Item 4 - Section 10 (after paragraph (d) of the definition of reviewable decision)

15. This item inserts after paragraph (d) of the definition of 'reviewable decision' in section 10 of the SIS Act paragraphs (da), (db) and (dc). This amendment is necessary to include as reviewable decisions:

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a decision by the Commissioner under subsection 27A(4) (refer item 18) to treat an application for variation of approved trustee status as withdrawn; and

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decisions of the Commissioner to vary or refuse to vary the approval of a trustee under new sections 27B and 27C (refer item 18).

Item 5 - Section 10 (after paragraph (h) of the definition of reviewable decision)

16. This item inserts after paragraph (h) of the definition of 'reviewable decision' in section 10 of the SIS Act paragraphs (ha) and (hb). This amendment is necessary to include as reviewable decisions, those decisions made under new subsection 70A(1) (refer item 28).

Item 6 - Section 10 (after paragraph (n) of the definition of reviewable decision)

17. This item inserts after paragraph (n) of the definition of 'reviewable decision' in section 10 of the SIS Act paragraphs (na), (nb) and (nc). This amendment is necessary to include as reviewable decisions those decisions made under new subsections 93A(2), 93A(3), 93A(4) and 93A(5) (refer item 32).

Item 7 - Section 10 (paragraph (r) of the definition of reviewable decision)

18. This item amends paragraph (r) of the definition of 'reviewable decision' in section 10 of the SIS Act and inserts paragraphs (ra) and (rb). This amendment is necessary to include as a reviewable decisions, a decision of the Commissioner:

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refusing to allow a longer period than 14 days to make an application for waiver under (new subsection 126B(4) - refer item 52);

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refusing to make a declaration waiving an applicant's status as a disqualified person (under new subsection 126D(3) - refer item 52); and

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refusing to waive the payment of the whole, or part of the reimbursement of fees (under new subsection 126F(3) - refer item 52).

19. The existing paragraph (r) is deleted as it relates to subsections 126(2) and (4) which have been deleted by item 50.

Item 8 - Section 10 (definition of superannuation standards officer)

20. This item amends the definition of superannuation standards officer in section 10 of the SIS Act to exclude an officer of the Australian Bureau of Statistics who obtains protected information or documents through paragraph 346(6)(da). These officers are covered by the secrecy provisions in the Census and Statistics Act 1905.

21. It is proposed that paragraph (d) of the definition of superannuation standards officer will be inserted by the Taxation Laws Amendment Bill (No. 2) (refer item 2 of Schedule 6 of that Bill).

Item 9 - Section 10

22. This item amends section 10 of the SIS Act by inserting a definition of 'written custody requirements' for the purposes of the amendments being made by item 18.

Item 10 - Section 10

23. This item inserts new subsection 10(2) which prescribes that a director of a corporate trustee of a fund that is also an employer-sponsor of the fund is not taken to be an associate of that employer-sponsor by reason only of being such a director. This amendment removes an unintended effect of the definition of 'independent director' that a director appointed to the board of a corporate trustee which is also an employer-sponsor is taken to be an associate of the employer-sponsor, thus failing the definition of 'independent director'.

24. This amendment replaces the changes made by Temporary Modification Declaration No. 9 made by the Commissioner. Accordingly, subclause 4(1) provides for Temporary Modification Declaration No. 9 to effectively be revoked.

Item 11 - Subsection 18(1)

25. This item amends subsection 18(1) of the SIS Act to make it subject to inserted section 18A (refer item 13).

Item 12 - After subsection 18(7)

26. This item inserts new subsections 18(7A), 18(7B) and l8(7C) into the SIS Act. Subsection 18(7A) allows the Commissioner to place conditions on a superannuation fund that is declared not to be a public offer superannuation fund under subsection 18(7). If a fund breaches one of these conditions the trustee must immediately inform the Commissioner in writing of the breach (subsection 7B). Failure to comply with subsection 18(7B) could make the trustee liable to a penalty of 30 penalty units. Subsection 7C allows the Commissioner to revoke a declaration under subsection 18(7) if he or she becomes aware that a condition to which the declaration was subject has been breached.

Item 13 - After section 18

27. This item inserts after section 18 of the SIS Act new section 18A. This amendment exempts certain excluded superannuation funds from being a public offer superannuation fund. These funds are generally where the trustee and members are closely related and the trustee does not receive any remuneration from the fund or any person. For these funds to be regarded as public offer superannuation funds it would be disproportionately expensive for such funds and, given their small size and the close relationship between the members and the trustee, unnecessary. This new section 18A is largely the same as the "section 18(1A)" inserted into the SIS Act by Temporary Modification Declaration No. 7 made by the Commissioner. Accordingly, subclause 4(2) provides for Temporary Modification Declaration No. 7 to effectively be revoked.

Item 14 - Section 22

28. This item inserts a new subsection 22(2) which states that a reference in section 27A, 27B, 27C, 27D, 27E, 28 or 29 to an approval includes a references to an approval as varied under new sections 27B or 27C (refer item 18).

Item 15 - Section 24

29. This item amends section 24 of the SIS Act to allow the Commissioner to request further information when deciding an application for approval as a trustee of a public offer entity. It also gives the Commissioner the discretion to treat an application as withdrawn if the applicant does not provide the requested information. The Commissioner must inform the applicant of a decision to treat the application as withdrawn.

Item 16 - Section 26

30. This item amends section 26 of the SIS Act by inserting subsection 26(6). This subsection requires an instrument of approval to state the particular subparagraph of paragraph 26(1)(b) that was the basis of the applicant's approval. This amendment is made for the purposes of amendments to paragraphs 28(2)(c), (d), (da) and (e) and paragraphs 29(2)(b)(, (c), (ca) and (d) (refer items 20 and 21). It will also assist the trustee in any variation of approval requests they may have in the future by providing them with a readily accessible reference to the subparagraph that they have been approved under.

31. If a particular subparagraph of 26(1)(b) 'applied' to the approval of a trustee before the commencement of these provisions, that subparagraph is the subparagraph 'designated' for the purposes of new subsection 26(6).

Item 17 - Paragraph 27(b)

32. This item amends paragraph 27(b) of the SIS Act to make it consistent with amendments made by item 18 which allow an approval for an approved trustee to be varied.

Item 18 - After section 27

33. This item inserts after section 27 of the SIS Act new sections 27A, 27B, 27C, 27D and 27E. These sections provide a mechanism for varying the conditions applying to a trustee's approval to be a trustee of a public offer entity. The Commissioner can also vary the written custody requirements with which the trustee is required to comply and, the particular subparagraph of paragraph 26(1 )(b) which apply to the approval of the trustee.

34. A variation can generally occur either at the written request of the trustee, or on the initiative of the Commissioner. Currently, Part 2 of the SIS Act does not contain any mechanism for changing the conditions attaching to the approval, or the written custody requirements with which an approved trustee is required to comply, or the particular subparagraph of paragraph 26(l)(b) which applies to an approval. Situations can arise where a trustee's changed circumstances make a variation to one or more of these conditions or requirements either necessary or reasonable.

35. New section 27A provides that an approved trustee can apply to the Commissioner to have the designation of the subparagraph of paragraph 26(1)(b), conditions of approval, or written custody requirements varied. It also states how an application must be made and what an application must include and certain circumstances where an application is regarded as withdrawn.

36. New section 27B provides the time within which the Commissioner must decide an application for a variation of approval (generally within 60 days).

37. New section 27C provides that the Commissioner can vary the conditions of approval, or written custody requirements, on his or her own initiative.

38. New section 27D provides that the Commissioner must notify the trustee of any decision to vary, or refusing to vary, an approval under section 27B or 27C. It also prescribes the requirements for a notice varying an approval and a notice refusing to vary the approval of a trustee.

39. New section 27E provides that a variation of approval comes into force at the time specified in the notice varying the approval and is revoked at a time when the approval is revoked or a new variation comes into force.

40. These new sections are largely the same as the "section 27A and 27B" inserted into the SIS Act by Temporary Modification Declarations Nos. 4 and 17 made by the Commissioner. Accordingly, subclause 4(3) provides for Temporary Modification Declarations Nos. 4 and 17 to effectively be revoked.

Item 19 - Transitional provisions relating to Temporary Modification Declaration Nos. 4 and 17

41. Temporary Modification Declaration No. 4 made by the Commissioner allows the Commissioner to vary the approval of a trustee under Part 2 of the SIS Act on an application by the trustee. Temporary Modification Declaration No. 17 made by the Commissioner allows the Commissioner to vary the approval of a trustee under Part 2 on his or her own initiative. The Bill will insert (refer item 18) into the SIS Act provisions making these Temporary Modification Declarations redundant. Accordingly they will be effectively revoked by subclause 4(3).

42. This item provides for transitional provisions related to those revocations. The item provides that variations of approvals, applications made, or instruments made under the provisions of Temporary Modification Declarations Nos. 4 and 17 have effect as if they were made under the inserted sections 27A, 27B, 27C and 27D of this Bill. This makes it clear that variations made under Temporary Modification Declarations Nos. 4 and 17 continue to be valid despite their revocation and are themselves able to be varied under the new provisions inserted by this Bill.

Item 20 - Paragraphs 28(2)(c), (d), (da) and (e)

43. This item makes a minor amendment to paragraphs 28(2)(c), (d), (da) and (e) so that the wording in those paragraphs is consistent with new subsection 26(6) (refer item 16) and new subsection 27D(2)(c) (refer item 18). Paragraph 28(2)(da) is proposed to be inserted by the Taxation Laws Amendment Bill (No. 2)1995.

Item 21 - Paragraphs 29(2)(b), (c), (Ca) and (d)

44. This item makes a minor amendment to paragraphs 29(2)(b), (c), (ca) and (d) so that the wording in those paragraphs is consistent with new subsection 26(6) (refer item 16) and new subsection 27D(2)(c) (refer item 18). Paragraph 29(2)(ca) is proposed to be inserted by the Taxation Laws Amendment Bill (No. 2)1995.

Item 22 - Paragraph 36(1)(c)

45. This item amends paragraph 36(1)(c) of the SIS Act so that trustees of superannuation entities do not have to lodge the original auditor's report with their annual return. Many trustees will want to keep the original report for their records. The amendment requires the trustee to provide a copy of the auditor's report, certified by the trustee as being a true copy.

46. This amendment replaces the changes made by Temporary Modification Declaration No. 15 made by the Commissioner. Accordingly, subclause 4(1) provides for Temporary Modification Declaration No. 15 to effectively be revoked.

Item 23 - Subsection 36(4)

47. This item amends subsection 36(4) of the SIS Act to make it consistent with the amendment to paragraph 36(1)(c) by making section 36(4) refer to the 'report' in section 36(1)(c) not the 'certificate'.

Item 24 - Paragraph 42(1)(a)

48. This item amends paragraph 42(1)(a) of the SIS Act to allow an approved deposit fund to convert to a superannuation fund during a year of income without jeopardising its compliance status. This amendment will make it more efficient for approved deposit funds to so convert.

49. This amendment replaces Temporary Modification Declaration No. 18 made by the Commissioner. Accordingly, subclause 4(1) provides for Temporary Modification Declaration No. 18 to effectively be revoked.

Item 25 - Section 42

50. This item amends section 42 by inserting subsection 42(2). This subsection clarifies that a reference to a member, means beneficiary when that entity was an approved deposit fund. This is necessary because of the amendment made in item 24.

Item 26 - After subsection 62(1)

51. This item inserts after subsection 62(1) of the SIS Act new subsection 62(1A). The purpose of subsection 62(1A) is to remove confusion about the terms 'for each member of the fund' and 'in respect of each member' in subsection 62(1). This amendment makes it clear that the SIS Act does not require funds to provide the same types of benefits for all members.

Item 27 - After section 64

52. This item inserts after section 64 of the SIS Act new section 64A. Section 64A provides that a person, other than a trustee or insurer, who is joined to a disability complaint under the Superannuation (Resolution of Complaints) Act 1993, must comply with any determination made by the Superannuation Complaints Tribunal in relation to that complaint. This is consistent with amendments being made to the Insurance Act 1973 and the Life Insurance Act 1995 which require life insurers and other insurance providers to comply with determinations made by the Tribunal in relation to disability complaints.

Item 28 - After section 70

53. This item inserts after section 70 of the SIS Act new section 70A. Section 70A allows the Commissioner to determine a person to be a standard employer-sponsor for the purposes of Part 8. Part 8 prescribes the amount of assets that can be invested in a standard employer- sponsor of the fund, or an associate of a standard employer-sponsor. These are referred to as the in-house asset rules. In certain circumstances it may be appropriate for the Commissioner to determine a person to be a standard employer-sponsor of the fund for the purposes of Part 8 and thus restrict the level of investments in that person. This will provide further protection for the members of the fund.

54. If the Commissioner makes or revokes such a declaration, he or she must inform the trustee as soon as practicable after doing so.

Item 29 - Paragraph 71(4)(b)

55. This item amends paragraph 71(4)(b) of the SIS Act to make a consequential amendment to the wording of that paragraph to reflect the new section 70A (refer item 28).

Item 30 - Section 92

56. This item amends section 92 of the SIS Act by inserting subsection 92(13). Different equal representation requirements apply depending on the size of the fund membership, and accordingly transitional rules generally apply when a fund changes size. However, there are currently no transitional rules for funds which change from having less than 5 members to 5 or more but less than 50 members.

57. The amendment inserts transitional rules for such funds.

Item 31 - Section 93(5)

58. There are currently no transitional rules for funds with less than 5 members to meet the equal representation requirements if they grow to 50 or more members. This item amends subsection 93(5) to insert transitional rules for such funds.

Item 32 - After section 93

59. This item inserts after section 93 of the SIS Act new section 93A. Sections 92 and 93 require a public offer superannuation fund covered by these sections to either have an independent trustee or comply with the equal representation rules. The definition of 'independent trustee' in section 10 of the SIS Act states that an independent trustee must not be an employer-sponsor or an associate of an employer-sponsor. However, the definition also has the effect that if employees of a professional trustee join a public offer fund operated by the professional trustee, the trustee would fail the independence test.

60. It is considered appropriate to allow such employees to join a public offer fund operated by the professional trustee without jeopardising the effective independence of the trustee from both the employer-sponsors and members of the fund. To allow this to occur it is proposed to amend the SIS Act so that, provided the number of employees who are members of the fund, and the amount of benefits of such employees is kept to an appropriate level, then the trustees will still be considered independent. Subsections 93A(2) and 93A(3) provides that the 'appropriate' level is 10% or such higher percentage approved by the Commissioner.

61. This amendment replaces Modification Declaration No. 1 made by the Commissioner. Accordingly, clause 3 provides for Modification Declaration No. 1 to effectively be revoked.

Item 33 - Transitional provisions relating to Modification Declaration No. 1

62. The new section 93A means that Modification Declaration No. 1 is no longer necessary and it is revoked by clause 3. To make it clear that approvals given under Modification Declaration No. 1 continue to have effect after revocation, item 22A provides that approvals made under Modification Declaration No. 1 are taken to be approvals given under section 93A (as inserted by item 32).

Item 34 - Paragraphs 101(1)(a) and (b)

63. This item amends paragraphs 101(1 )(a) and (b) of the SIS Act to make a reference to inserted subsection 101(1 A).

Item 35 - After subsection 101(1)

64. This item inserts after subsection 101(1) of the SIS Act subsection l0l(lA). This amendment removes an inconsistency between the SIS Act and the Superannuation (Resolution of Complaints) Act 1993 (the SRC Act). Before a complaint can be heard by the Superannuation Complaints Tribunal (the Tribunal) it must have been through the internal complaints system of the superannuation fund or approved deposit fund. Currently section 101 of the SIS Act only allows beneficiaries of the fund to make a complaint. This means that certain persons who are eligible to make a complaint to the Tribunal under section 14 of the SRC Act, are unable to do so because they are not in the class of people who can first make a complaint to the fund.

65. Subsection 101(1A) extends the range of persons who can make a complaint to a fund's internal complaints system to include those who can complain under section 14 of the SRC Act. This will remove the inconsistency between the SIS Act and the SRC Act.

Item 36 - After subsection 109(1)

66. This item inserts after subsection 109(1) of the SIS Act subsection 109(1 A). Subsection 109(1 A) introduces a requirement that investments must at all times be maintained as if they were arms-length investments. This works in conjunction with existing section 109 which ensures that all dealings regarding entering into an investment are also carried out on an arms-length basis.

Item 37 - Subsection 109(2)

67. This item amends subsection 109(2) of the SIS Act by referring to inserted subsection (1 A), thus making it a civil penalty provision and providing for civil and criminal consequences for breaching subsection 109(1A).

Item 38 - Subsection 109(3)

68. This item amends subsection 109(3) of the SIS Act by referring to inserted subsection 109(1A).

Item 39 - Heading to Part 13

69. This item amends the heading of Part 13 by adding 'statements and audits' after 'accounts'. This amendment makes the heading consistent with amendments made to Part 13.

Item 40 - Section 110

70. This item amends section 110 of the SIS Act by inserting 'statements and audits' after 'accounts'. This amendment makes the object of the Part consistent with amendments made to Part 13.

Item 41 - After paragraph 112(1)(b)

71. This item inserts after paragraph 112(1)(b) of the SIS Act paragraph 112(1)(ba). This provides that the trustee of a superannuation entity, except where the regulations provide otherwise, must have a statement of cash flows prepared for each year of income.

72. Accounting standards generally require superannuation entities to have prepared a statement of cash flows. This amendment makes the SIS Act consistent with these accounting standards.

Item 42 - Section 113

73. This item amends section 113 of the SIS Act so that a trustee must make the necessary arrangements to enable an approved auditor to give the trustee a report of the operations of the entity in the approved form. An approved form must relate to the audit of the accounts and statements required by the SIS Act, or other accounts and statements prepared in respect of that year of income as identified in the form. It must also include a statement by the auditor that the entity has complied with certain provisions of the SIS Act and Regulations as identified in the form. A trustee who intentionally or recklessly fails to make the necessary amendments will be liable to a penalty of up to 2 years imprisonment. An auditor who intentionally or recklessly fails to provide the report by the prescribed time will be liable to a penalty of up to 6 months imprisonment

74. This amendment replaces the need for Temporary Modification Declaration No. 13 made by the Commissioner. Accordingly, subclause 4(2) provides for Temporary Modification Declaration No. 13 to effectively be revoked.

Item 43 - Application of items 39, 40,

41 and 42

75. This item restricts the amendments made by items 39, 40, 41 and 42 to the entity's 1995-96 year of income and subsequent years of income. This means that the trustee and approved auditor of a superannuation entity will only have to comply with the new requirements for accounts, statements and reports that relate to the 1995-96 years of income and subsequent years of income. In respect of reports that relate to the 1994-95 year of income, the provisions of the SIS Act continue to apply (as modified by Temporary Modification Declaration No. 13) as they existed immediately before these amendments commence.

Item 44 - Paragraph 117(5)(c)

76. This item amends paragraph 117(5)(c) of the SIS Act to include a reference to subparagraph 117(5)(b)(iii). Two of the preconditions that must be met before a payment can be made to a standard employer-sponsor of a fund are that an actuary has given the trustee a certificate stating that the fund would remain in a satisfactory position and the trustee is satisfied that the payment was reasonable. Currently these requirements do not apply to funds which do not have either a corporate trustee or a group of 2 or more individual trustees.

77. The amendment will make these two preconditions apply irrespective of the trustee structure of the fund.

Item 45 - Section 117

78. This item amends section 117 of the SIS Act by inserting subsection 117(11). The current provisions of section 117 apply only to standard employer-sponsored funds and standard employer-sponsors. The amendment will extend the application of the section to former standard employer-sponsored funds and former standard employer-sponsors.

Item 46 - Paragraph 120(2)(a)

79. This item amends paragraph 120(2)(a) of the SIS Act by referring to inserted subsection (2A) (refer item 48).

Item 47 - Paragraph 120(2)(c)

80. This item amends paragraph 120(2)(c) of the SIS Act to insert 'administrator'. This amendment makes this provision consistent with the repeal of Part 5.3 and enactment of Part 5.3A of the Corporations Law.

Item 48 - After subsection 120(2)

81. This item inserts after subsection 120(2) of the SIS Act subsection 120(2A). Subsection 120(2A) prescribes when a body corporate with a responsible officer who is, or may be, a disqualified person, will become a disqualified person. A body corporate will be a disqualified person if:

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the body corporate knows, or has reasonable grounds to suspect, a person who is, or is acting as a responsible officer of the body corporate is a disqualified person; and

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the body corporate knows, or has reasonable grounds to suspect, that either the person is not eligible to make an application under section 126B, or if they are eligible, they will not make a application to have their disqualified person status waived within 14 days of becoming a disqualified person.

Item 49 - Subsection 121(2)

82. This item amends subsection 121(2) of the SIS Act so that a person cannot intentionally remain a responsible officer of a body corporate, which is a trustee of a superannuation entity, when they are a disqualified person. A person who intentionally breaches this provision will be liable to a penalty of imprisonment of up to 2 years.

Item 50 - Subsections 126(2), (3), (4), (5) and (6)

83. This item omits subsections 126(2), (3), (4), (5) and (6). This effectively removes the 28 day time period that investment managers which were disqualified persons had to resign. This will ensure that disqualified persons are not in a position of responsibility of superannuation entities.

84. This item also inserts a new subsection 126(2) of the SIS Act so that a person cannot intentionally remain a responsible officer of a body corporate which is an investment manager of a superannuation entity (other than an excluded fund) when they are a disqualified person. A person who intentionally breaches this provision will be liable to a penalty of imprisonment of up to 2 years.

Item 51 - Subsections 126A(2), (3), (4), (5) and (6)

85. This item omits subsections 126A(2), (3), (4), (5) and (6). This effectively removes the 28 day time period that custodians which were disqualified persons had to resign. This will ensure that disqualified persons are not in a position of responsibility in superannuation entities.

86. This item also inserts a new subsection 126A(2) of the SIS Act so that a person cannot intentionally remain a responsible officer of a body corporate which is a custodian of a superannuation entity (other than an excluded fund) when they are a disqualified person. A person who intentionally breaches this provision will be liable to a penalty of imprisonment of up to 2 years.

Item 52 - After section 126A

87. This item inserts after section 126A of the SIS Act section 126B, 126C, 126D, 126E and 126F. These sections have been inserted to allow the Commissioner to waive the disqualified person requirements for trustees, and responsible officers of trustees, investment managers and custodians of superannuation entities, if the Commissioner believes, given the information provided, that the person is highly unlikely to be a prudential risk to a superannuation entity.

88. Currently the impact of the disqualified person provisions means, for example, that even persons whose only offence was a minor offence involving dishonesty 20 years ago, for example shoplifting, are disqualified persons and cannot act as a trustee, or as responsible officers of trustees, investment managers or custodians. These new sections will enable the Commissioner to waive the disqualified person status of such an individual.

89. Section 126B prescribes the persons who are eligible to make an application for a waiver of the disqualified persons provisions. A person will be able to make an application if they have not been convicted of an offence which resulted in a penalty of imprisonment of 2 years or more, or a fine of 120 penalty units or more. These levels may be increased in the regulations. The section also prescribes the requirements for an application.

90. Section 126C prescribes the time period within which the Commissioner must decide an application (generally 60 days). If the application has not been decided at the end of that period it is taken to have been refused.

91. Section 126D provides that the Commissioner must notify the person of the result of their application. It also prescribes the criteria that the Commissioner will take into consideration when determining a application. Even though the Commissioner may waive the applicant's status as a disqualified person, this declaration will be void if the applicant has been convicted of an offence in respect of dishonest conduct that was not included in the application, a civil penalty order has been made against the person, or the applicant is insolvent. If the Commissioner decides not to waive the requirements he or she must advise the applicant of his or her decision and that the applicant must resign immediately. The Commissioner must also advise the applicant that is he or she fails to so resign and is the responsible officer of a body corporate, the Commissioner will tell the body corporate of the applicant's status as a disqualified person. If the Commissioner becomes aware that the person has not resigned from being a responsible officer of a body corporate that is a trustee, investment manager, or custodian of a superannuation entity, than the Commissioner must tell the body corporate that the person is a disqualified person.

92. Section 126E provides that a person will not be regarded as a disqualified person while the application is being considered provided it is made within 14 days of the person's conviction or the commencement of the section. If the Commissioner decides to waive an applicant's disqualified persons status the person will be treated as if they were never disqualified. If a person makes an application outside this time period, under subsection 126B(4), that person continues to be a disqualified person but if the Commissioner decides to waive the disqualified person provisions they will be treated as if they were never a disqualified person.

93. Section 126F provides that the Commissioner may request further information from the applicant in relation to the application. The Commissioner may also request the applicant to pay for the cost of the Commissioner attaining information from certain persons (such as a police force). However the Commissioner also has the ability to waive the whole, or part, of the amount. If the applicant fails to pay the amount requested the Commissioner must treat the application as being withdrawn. The section also provides that nothing in this section or section 126B prevents the Commissioner from deciding an application before all the requirements of 126B(3) have been complied with.

Item 53 - Savings provision concerning Temporary Modification Declaration No. 14

94. The amendments made by item 52 mean that Temporary Modification Declaration No. 14 is no longer necessary and it is revoked by subclause 4(2). To make it clear that applications, declarations, and any periods of grace which were made for the purposes of Temporary Modification Declaration No. 14 continue to have effect after revocation, this item provides that applications, declarations, and periods of grace made under Temporary Modification Declaration No. 14 are taken to be valid under the amendments made by this Act.

Item 54 - Subsection 129(1)

95. This item amends subsection 129(1) of the SIS Act to remove unnecessary references to the 'first person'.

Item 55 - Subsection 129(2)

96. This item amends subsection 129(2) of the SIS Act to remove unnecessary references to the 'first person'.

Item 56 - Subsection 129(3)

97. This item amends subsection 129(3) of the SIS Act to clarify the circumstances when an auditor or actuary must tell the trustee of a breach, or likely breach, of the SIS Act or the regulations. New subsection 129(3A) provides that an auditor or actuary does not have to tell the trustee of a breach, or likely breach, only if:

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they have been told by another auditor or actuary that the other auditor or actuary has already informed the trustee or Commissioner about the breach or likely breach in writing; and

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they have no reason to not believe that person.

98. Subsection (3B) provides that if the other auditor or actuary intentionally states that they have informed the trustee or Commissioner of the breach, or possibility of a breach, and they have not done so, then they are liable to a penalty of up to 12 months imprisonment.

Item 57 - Subsection 129(4)

99 This item amends subsection 129(4) of the SIS Act to remove unnecessary references to the 'first person'.

Item 58 - Subsection 129(5)

100. This item amends subsection 129(5) of the SIS Act to remove unnecessary references to the 'first person'.

Item 59 - Subsection 129(6)

101. This item amends subsection 129(6) of the SIS Act to remove unnecessary references to the 'first person'.

Item 60 - Subsection 130(1)

102. This item amends subsection 130(1) of the SIS Act to remove unnecessary references to the 'first person'.

Item 61 - Subsection 130(2)

103. This item amends subsection 130(2) of the SIS Act to clarify the circumstances when an auditor or actuary must tell the trustee if the financial position of the entity is unsatisfactory, or about to become unsatisfactory. New subsection 130(2A) provides that an auditor or actuary does not have to tell the trustee only if:

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they have been told by another auditor or actuary that the other auditor or actuary has already informed the trustee or the Commissioner about the unsatisfactory financial position of the entity; and

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they have no reason to not believe that person.

104. Subsection (3B) provides that if the other auditor or actuary intentionally states that they have informed the trustee or Commissioner that the financial position of the entity is unsatisfactory, or is about to become unsatisfactory, and they have not done so, then they are liable to a penalty of up to 12 months imprisonment.

Item 62 - Subsection 130(3)

105. This item amends subsection 130(3) of the SIS Act to remove unnecessary references to the 'first person'.

Item 63 - Subsection 130(4)

106. This item amends subsection 130(4) of the SIS Act to remove unnecessary references to the 'first person'.

Item 64 - Subsection 130(5)

107. This item amends subsection 130(5) of the SIS Act to remove unnecessary references to the 'first person'.

Item 65 - Paragraph 131(1)(a)(ii)

108. This item inserts a new paragraph 131(1)(a)(iii). Paragraph 131(1)(a)(iii) will clarify the circumstances when the Commissioner can disqualify an auditor. This paragraph includes the situation where the auditor has failed to adequately and properly perform any functions that an auditor is entitled to perform in relation to the SIS Act or the regulations. This paragraph is consistent with the new subparagraph 131A(1)(a)(iii) inserted by item 66.

Item 66 - After section 131

109. This item inserts after section 131 of the SIS Act section 131A. Currently section 131 of the SIS Act allows the Commissioner to disqualify a person from being an approved auditor. There may be circumstances where, rather than, or perhaps in addition to, disqualifying an auditor, it would be appropriate for the Commissioner to refer a matter to an auditor's professional association for appropriate disciplinary action. While actuaries may not be disqualified this amendment provides the power to refer matters to an actuary's professional association.

110. This amendment allows the Commissioner to refer details of a matter to the auditor's or actuary's professional association for any necessary disciplinary action. The Commissioner must inform the auditor or actuary that they have referred a matter to the professional association as soon as practicable, and no later than 7 days after the referral has occurred.

111. This amendment will give the Commissioner an option, other than, or in addition to, disqualification, to deal with auditors who, in the opinion of the Commissioner, fail to adequately and properly carry out their duties, and will also provide a mechanism for relevant professional associations to reprimand auditors and actuaries.

Item 67 - After paragraph 193(j)

112. This item inserts after paragraph 193(j) of the SIS Act paragraph 193(ja). Section 193 prescribe the provisions of the SIS Act that are civil penalty provisions. This amendment is necessary to make inserted subsection 109(1A) (refer item 36) a civil penalty provision.

Item 68 - Section 270

113. This item amends section 270 of the SIS Act to broaden the categories of people from whom an inspector may require assistance and/or information during an investigation. This amendment will provide an inspector with similar investigatory powers as the Australian Securities Commission under the Australian Securities Commission Act 1989. In particular, an inspector will be able to obtain assistance from relevant persons, former relevant persons and other persons whom the inspector reasonably believes may be able to assist.

Item 69 - Paragraph 288(2)(a)

114. This item amends paragraph 288(2)(a) of the SIS Act to insert 'administration' and 'administrator'. This amendment makes this provision consistent with the repeal of Part 5.3 and enactment of Part 5.3A of the Corporations Law.

Item 70 - Subsection 310(5) (paragraph (c) of the definition of officer)

115. This item amends subsection 310(5) (paragraph (c) of the definition of 'officer') of the SIS Act to insert 'administrator'. This amendment makes this provision consistent with the repeal of Part 5.3 and enactment of Part 5.3A of the Corporations Law.

Item 71 - After subsection 313(1)

116. This item inserts after subsection 313(1) of the SIS Act subsections 313(1A) and 313(1B). Subsection 313(1A) allows the Commissioner to make an application to the Court for an order to be made against a trustee for the protection of any or all beneficiaries of a superannuation entity, without the need for an investigation, prosecution or civil proceeding to have begun. The types of orders that can be made include orders prohibiting money being sent out of Australia and orders appointing a receiver.

117. At the moment section 313 provides that a State/Territory Supreme Court, or the Federal Court of Australia, may, if the Court considers it necessary or desirable, make certain types of orders to protect the interests of an aggrieved person. The ability of the Commissioner to seek such orders from the Court is currently restricted to circumstances where an investigation, prosecution or civil proceeding has begun against a person.

118. There are circumstances where the need for such orders, to protect beneficiaries, will arise where no such investigation, prosecution or civil proceeding is underway. The amendment will provide greater protection to beneficiaries, by allowing the Commissioner to seek an order whenever he or she is of the opinion that such action is necessary to protect one or more beneficiaries of the superannuation entity.

119. Subsection 313(1 B) provides that for the purposes of section 313(1 A) any reference to contravening person in subsection 313(2) is a reference to the trustee.

Item 72 - Subsection 313(5)

120. This item amends subsection 313(5) of the SIS Act by referring to inserted subsection 313(IA).

Item 73 - Subsection 313(6)

121. This item amends subsection 313(6) of the SIS Act by referring to inserted subsection 313(1A).

Item 74 - Subsection 313(7)

122. This item amends subsection 313(7) of the SIS Act by referring to inserted subsection 313(1A).

Item 75 - Subsection 313(9)

123. This item amends subsection 313(9) of the SIS Act by referring to inserted subsection 313(1A).

Item 76 - Subsection 344(12)

124. This item amends subsection 344(12) of the SIS Act by referring to the new paragraph (ba) of the definition of 'reviewable decision' in section 10 of the SIS Act,

Item 77 - Subsection 344(12)

125. This item amends subsection 344(12) of the SIS Act by referring to the new paragraphs (ra) and (rb) of the definition of 'reviewable decision' in section 10 of the SIS Act.

Item 78 - After subsection 346(2)

126. This item amends subsection 346(2) of the SIS Act by inserting a penalty provision of imprisonment for up to 2 years for a superannuation standards officer who breaches the secrecy provisions. This is the same penalty as applies under section 70 of the Crimes Act 1914.

Item 79 - Before subsection 346(3)

127. This items inserts subsection 346(2A) into the SIS Act. Subsection 346(2A) provides that any information relating to convictions, attained in relation to an application for waiver of the person's status as a disqualified person, must not be disclosed to any other person. A superannuation standards officer who breaches this requirement is liable to a penalty of up to 2 years imprisonment.

Item 80 - After subsection 346(4)

128. This item inserts after subsection 346(4) of the SIS Act subsection 346(4A). This amendment allows the Commissioner to provide information to a professional association under inserted subsection 131A(1) without breaching the secrecy provisions of the SIS Act.

Item 81 - After subsection 346(5)

129. This item inserts new subsection 346(5A) into the SIS Act. Subsection 346(5A) provides that subsection 346(2) does not prohibit a superannuation standards officer from disclosing personal information, or providing a document which includes personal information relating to an individual if that individual has consented in writing to that disclosure. This is consistent with an equivalent exception in subsection 346(5).

Item 82 - Paragraph 346(6)(da)

130. This item amends paragraph 346(6)(da) so that it is consistent with terminology used in the Census and Statistics Act 1905. Paragraph 346(6)(da) is proposed to be inserted into the SIS Act by the Taxation Laws Amendment Bill (No. 2)1995.

Item 83 - After subsection 346(6A)

131. This item inserts after subsection 346(6A) of the SIS Act subsections 346(6B) and Subsection 346(6B) prescribes that information or a document provided to persons under inserted subsection 131A(1) must not be disclosed to any other person. Also the information can only be used in deciding whether any disciplinary or other action should be taken against the auditor or actuary by the professional association. The maximum penalty for breaching this requirement is imprisonment for 2 years.

132. Subsection 346(6C) provides that the requirements of subsection 346(6B) do not prevent information or documents being provided to a court for the purposes of proceedings in relation to any disciplinary action taken against an auditor or actuary.

Item 84 - Subsection 346(9)

133. This item amends subsection 346(9) of the SIS Act by inserting a penalty provision of imprisonment for 2 years for a Secretary of a Department or an officer of that department who breaches the secrecy provisions. This is the same penalty as applies under section 70 of the Crimes Act 1914.

Item 85 - Subsections 346(9A) and (9B)

134. This item amends subsection 346(9A) of the SIS Act by providing that if protected information is produced under paragraph 346(6)(da) to the Australian Statistician or an officer of the Australian Bureau of Statistics, then it is taken to be information given in pursuance of the Census and Statistics Act 1905 and accordingly is protected by the secrecy provisions in that Act. As a result of this change subsection (9B) is unnecessary and has been deleted.

135. Subsections 346(9A) and (9B) are proposed to be inserted into the SIS Act by the Taxation Laws Amendment Bill (No. 2)1995.

Item 86 - After section 349

136. This item inserts after section 349 of the SIS Act section 349A. There are a number of provisions in the SIS Act and Regulations that on their own would (or may) restrict a fund trustee from paying benefits out of the fund (or restrict the manner in which such benefits could be paid out of the fund), even though those benefits may be benefits that the Bankruptcy Act 1966 specifically recognises as being available to creditors in the event of bankruptcy.

137. The amendment clarifies that fund trustees may pay benefits out of a regulated superannuation fund or approved deposit fund in accordance with the requirements of the Bankruptcy Act 1966.

SCHEDULE 5 AMENDMENTS OF THE SUPERANNUATION (RESOLUTION OF COMPLAINTS) ACT 1993

Item 1 - Subsection 3(2) (before the definition of complainant)

138. This item inserts a definition of 'annuity policy' into section 3 of the Superannuation (Resolution of Complaints) Act 1993 (the 'SRC Act'). The definition is intended to cover any annuity that is declared to be a superannuation policy under regulations made for the purposes of paragraph (b) of the definition of 'superannuation policy' in the Life Insurance Act 1995.

Item 2 - Subsection 3(2) (definition of complainant)

139. This item amends the definition of 'complainant' in section 3 of the SRC Act to include persons who make a complaint under new sections 14A (inserted by item 36) and 15A and 15B (inserted by item 41).

Item 3 - Subsection 3(2) (definition of complaint)

140. This item amends the definition of 'complaint' in section 3 of the SRC Act to include as complaints those that are made under proposed section 14A (inserted by item 36) or section 15A or 15B (inserted by item 41).

Item 4 - Subsection 3(2) (definition of disability)

141. The definition of 'disability' relates to section 23 of the SRC Act. In order to avoid confusion between this term and the new definition of 'disability benefit' (inserted by item 5), the definition of 'disability' has been omitted from section 3 and relocated so that it applies only to section 23 (item 51 refers).

Item 5 - Subsection 3(2) (before the definition of excluded complaint)

142. Self explanatory.

Item 6 - Subsection 3(2) (after the definition of fund)

143. This item inserts new definitions of 'insurer', 'interest' 'life company', 'life insurance broker', 'life policy', 'life policy fund' into section 3 of the SRC Act.

144. The insurers covered by the SRC Act will be confined to entities regulated by the Commonwealth under the Life Insurance Act 1995 and Insurance Act 1973 respectively.

145. The term 'interest' is referred to in new sections 14A and ISA and serves to delimit persons who are entitled to make complaints to the Superannuation Complaints Tribunal ('the Tribunal') in relation to life policy funds and annuity policies under those sections.

146. The term 'life insurance broker' has the same meaning as section 9 of the Insurance (Agents and Brokers) Act 1989, and the terms 'life policy' and 'life company' respectively have the same meaning as in the Life Insurance Act 1995.

147. The term 'life policy fund' is a regulated superannuation fund in respect of which the trustee maintains individual policies or a single life policy covering some or all members of the fund.

Item 7 - Subsection 3(2) (after the definition of review meeting)

148. This item inserts a new definition of 'sale' into section 3.

149. The definition of 'sale' covers activities or representations made at the time of or prior to the entry into or variation of an annuity policy. The definition is intended to cover representations made to persons other than the person who is actually making the complaint. This could include, for example, representations made to persons who, during the sale process, are acting on behalf of the person who acquires the interest in the policy.

Item 8 - Subsection 3(2) (after the definition of Tribunal Chairperson)

150. This item inserts a definition of Tribunal Deputy Chairperson to reflect the addition of a Deputy Chairperson to the Tribunal.

Item 9 - Subsection 3(2) (definition of Tribunal member)

151. This item amends the definition of 'Tribunal member' to reflect the addition of a Deputy Chairperson to the Tribunal.

Item 10 - Section 3

152. This item inserts a definition of 'representative of an insurer' in relation to an annuity policy or life policy issued by an insurer. The definition is intended to include an agent of the insurer and any person involved in the sale of an annuity policy or life policy maintained for the purposes of a life policy fund, except a life insurance broker within the meaning of the Insurance (Agents and Brokers) Act 1984, unless the life insurance broker is acting as an agent of an insurer.

Item 11 - Section 4

153. This item amends section 4 as a consequence of the expanded jurisdiction of the Tribunal. Section 4 presently expands the meaning of decision of a trustee for the purposes of the SRC Act. This item amends section 4 so that it also covers decisions of insurers or other decision-makers. Subsection (1) provides that a decision by those persons include a failure to make a decision by the trustee, insurer or other decision-maker, or a person acting for those entities, or conduct in relation to making a decision by the trustee, insurer or other decision-maker, or person acting for those entities.

Item 12 - After section 5

154. The SRC Act currently enables the Tribunal to deal with all complaints about death benefits paid by regulated superannuation funds with more than four members. Section 5A provides that the Tribunal's jurisdiction in this regard can have a more restricted operation so that it covers only those funds which exhibit any of the characteristics set out in paragraphs (a) to (c). This ensures that a successful challenge to the Tribunal's power to review trustee decisions in relation to the payment of death benefits where the superannuation fund is regulated under the Superannuation Industry (Supervision) Act 1993 under the 'old age pensions' Constitutional head of power, will not invalidate the entire scheme underlying the SRC Act.

Item 13 - Subsection 7(1)

155. This item amends subsection 7(1) of the SRC Act to provide for the addition of a Deputy Chairperson and two new part-time members to the Tribunal.

Item 14 - After subsection 7(2)

156. This item amends subsection 7(2) of the SRC Act to provide for the appointment of the Deputy Chairperson by the Governor-General to hold office on a full-time basis.

Item 15 - Subsection 7(3)

157. This item amends subsection 7(3) of the SRC Act to provide that the Tribunal members, other than the Chairperson and Deputy Chairperson, are appointed by the Minister and hold office on a part-time basis.

Item 16 - Subsection 8(1)

158. This item amends subsection 8(1) of the SRC Act to provide that a person who has reached 65 years of age cannot hold office as the Deputy Chairperson.

Item 17 - Subsection 8(2)

159. This item amends subsection 8(2) of the SRC Act to provide that a person who is a trustee of a fund or a director or employee of a constitutional corporation that is a trustee of a fund is not eligible to be appointed as Deputy Chairperson.

Item 18 - Paragraph 8(3)(a)

160. This item amends paragraph 8(3)(a) of the SRC Act to set out the matters the Governor-General is to take into account in appointing the Deputy Chairperson.

Item 19 - Subsection 8(4)

161. This item amends subsection 8(4) of the SRC Act to provide that two of the Tribunal members, apart from the Tribunal Chairperson and Deputy Chairperson, are to be appointed after the Minister has consulted the Minister of Consumer Affairs about their appointment.

Item 20 - Subsection 9(1)

162. This item omits subsection 9(1) of the SRC Act and substitutes a new subsection 9(1) which provides that for the purposes of the performance or exercise of its functions or powers in relati on to a particular complaint, the Tribunal is to be constituted either by:

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the Tribunal Chairperson and 2 other Tribunal members (one of whom may be the Tribunal Deputy Chairperson) selected by the Tribunal Chairperson; or

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the Tribunal Deputy Chairperson and 2 other Tribunal members selected by the Tribunal Chairperson. Item 21 - Subsection 9(2)

163. This item amends subsection 9(2) of the SRC Act to provide that in selecting the other Tribunal members (including the Deputy Chairperson) to form review panels, the Chairperson is to take into account their qualifications, experience and suitability having regard to the nature of the complaint.

Item 22 - Subsections 9(3) and (4)

164. This item omits subsections 9(3) and (4) from the SRC Act and substitutes new subsections to provide that the Tribunal Chairperson is to preside at all meetings of the members constituting the Tribunal at which the Chairperson is present and that the Tribunal Deputy Chairperson is to preside at all meetings of the members constituting the Tribunal at which the Deputy Chairperson is present but not the Tribunal Chairperson. However, subsection (4) ensures that the Deputy Chairperson, when presiding at a meeting, must comply with procedural rules established by the Chairperson.

Item 23 - Subsection 10(1)

165. This item amends subsection 10(1) to provide that the Tribunal Deputy Chairperson must give written notice to the Minister of all direct or indirect financial interests that the person has or acquires in a fund, a constitutional corporation that is a trustee of a fund or of any other business.

Item 24 - Subsection 10(2)

166. his item amends subsection 10(2) of the SRC Act to ensure that the Deputy Chairperson is included in the members of the Tribunal who can replace the Chairperson in dealing with a particular complaint in circumstances where he or she has a direct or indirect interest in that complaint.

167. The item also inserts a new subsection (2A) to ensure that the Deputy Chairperson can be replaced by another member of the Tribunal, who may or may not be the Chairperson, where the Deputy Chairperson has a direct or indirect financial interest in the complaint.

Item 25 - Section 11

168. This item amends section 11 to remove the reference to trustees from the objectives of the Tribunal. This is required because of the extension of the Tribunal's jurisdiction to cover insurer decisions and conduct in relation to certain kinds of complaints.

Item 26 - Section 12

169. This item amends section 12 to remove the reference to trustees from the functions of the Tribunal. This is required because of the extension of the Tribunal's jurisdiction to cover insurer decisions and conduct in relation to certain kinds of complaints.

Item 27 - Subsection 14(1)

170. This item inserts a new subsection (1A) into section 14 to ensure that any complaints about a trustee decision to admit a person to a life policy fund are made to the Tribunal through new section 14A (item 36 refers).

Item 28 - Subsection 14(2)

171. This item amends subsection 14(2) to remove 'in excess of the powers of the trustee' or 'was an improper exercise of the powers of the trustee' - paragraphs (b) and (c) - as grounds on which a complaint may be made to the Tribunal. These grounds of complaint have been removed to ensure that the powers conferred on the Tribunal cannot be construed as judicial in character.

Item 29 - After subsection 14(2)

172. This item inserts a note after subsection 14(2) to clarify that although a complaint under section 14 is a complaint about a decision of a trustee the Tribunal may join an insurer or other person as a party to a complaint.

Item 30 - Paragraph 14(3)(a)

173. This item together with items 38, 39 and 40 amends the SRC Act to replace certain references to 'benefit' with 'death benefits'. This is to avoid confusion with what 'benefit' means in these references.

174. Paragraph 14(3)(a) provides that a person can only make a complaint about a trustees decision about a benefit within a prescribed period specified in a written notice. This paragraph has been misinterpreted by a number of funds which have wrongly told beneficiaries that they have only 28 days to complain to the trustee about the payment of any benefits (ie not just death benefits but, for example, retirement benefits). To avoid this confusion it is necessary to prescribe that benefit in paragraph 14(3)(a) of the SRC Act refers to death benefits only.

Item 31 - Subsection 14(3)

175. This item amends subsection 14(3) of the SRC Act to ensure that this section is confined in its operation to complaints under section 14 and does not apply to complaints made under the proposed sections 15A or 15B (inserted by item 41). Subsection 14(3) states that if a person has been given a written notice by a trustee of a fund setting out a decision in relation to the person and a prescribed period within which the person must complain to the Tribunal, the person may only make a complaint to the Tribunal within that time.

Item 32 - Subsection 14(4)

176. The item amends subsection 14(4) of the SRC Act to ensure that this section is confined in its operation to complaints under section 14 and does not apply to complaints made under the proposed sections 15A or 15B (inserted by item 41). Subsection 14(4) states that the Tribunal cannot deal with a complaint about a trustee's decision if the complaint is not made within the prescribed period referred to in subsection (3).

Item 33 - Subsection 14(5)

177. This item amends subsection 14(5) of the SRC Act to ensure that this section is confined in its operation to complaints under section 14 and does not apply to complaints made under the proposed sections 15A or 15B (inserted by item 41). Subsection 14(5) provides that the Tribunal cannot deal with a complaint that relates to excluded subject matter.

Item 34 - Subsection 14(6)

178. This item amends subsection 14(6) of the SRC Act to ensure that this section is confined in its operation to complaints under section 14 and does not apply to complaints made under the proposed sections 15A or 15B (inserted by item 41). Subsection 14(6) provides that the Tribunal cannot deal with a complaint that relates to the management of the fund as a whole. However, a similar limitation on the Tribunal's jurisdiction in respect of complaints under section 15B is provided for in new subsection 15B(4) (item 41 refers).

Item 35 - After subsection 14(6)

179. This item inserts new subsections 14(6A), (6B), (6C) and (6D). Subsection 14(6A) provides that the Tribunal can only deal with for complaints about trustee decisions relating to the payment of disability benefits if the trustee decision to which the complaint relates was on or after 1 November 1994 and the complaint is made with a year of the trustee decision.

180. Subsection (6B) ensures that persons can only access the Tribunal with disability complaints if the original claim for disability benefit to which the complaint relates was not lodged with the trustees within a year of the permanent cessation of employment due to disability. The reference to permanent cessation of employment is intended to ensure that time will not begin to run against persons who are on extended sick leave and, or, in receipt of some kind of salary continuance benefit and who retain a right to resume employment until they have permanently ceased employment.

181. Subsection 14(6C) ensures that the decision of the trustee referred to in subsection 14(6A) and (6B) is the original decision which rejected the claim, either in whole or in part, and not a subsequent reconsideration of that decision under any internal review mechanisms established by the fund. (Enabling the 12 month time period to run under subsection (6A) or (6B) from the date of a decision on reconsideration of the original decision would defeat the object of the time limit).

182. Subsection (6D) provides that for the purposes of subsection (6C) if a complaint is made about an original decision of a trustee under arrangements made under section 101 of Superannuation Industry (Supervision) 1993, and the original decision is confirmed, varied or another decision was substituted for the original decision, the confirmed, varied or substituted decision is taken to be have been made at the time the original decision was made.

Item 36 - After section 14

183. This item inserts after section 14 of the SRC Act new section 14A.

184. Section 14A comprises three subsections.

185. Subsection 14A( 1) enables a person who has, or claims to have, an interest in a life policy fund, either as a member of the fund who is covered by a life policy maintained by the trustee or as a person claiming through such a member, to complain to the Tribunal that the decision of the trustee to admit the person to the fund was unfair on unreasonable. By virtue of subsection 14A(2), these provisions have the effect of enabling persons who have suffered misconduct (for example, misrepresentation) at the hands of life office agents in relation to the sale of life office superannuation products provided through an interposed trust structure to obtain redress through the Tribunal.

186. Subsection 14A(3) provides that a complaint under this section is to be made by sending a written complaint to the office of the Tribunal.

187. Subsection 14A(4) sets out factors that the Tribunal must take into account and subsection 14A(5), factors that the Tribunal may take into account, in assessing whether the decision of the trustee to admit a person to a life policy fund was fair and reasonable.

188. Subsection 14A(6) ensures that the reference to person acting for the trustee in subsection 14A(5) includes a reference to an insurer or representative of the insurer when engaged in any dealings preliminary to the admission of a person as a member of the fund.

Item 37 - Subsection 15(1)

189. This item amends subsection 15(1) of the SRC Act to ensure that subsection 15(1) is confined in its operation to complaints under section 14 and does not apply to complaints made under the proposed sections 15A or 15B (inserted by item 41). Subsection 15(1) sets out the persons who can make a complaint about a trustee's decision.

Item 38 - Paragraph 15(1)(a)

190. This item together with items 30, 39 and 40 amends the SRC Act to replace certain references to 'benefit' with 'death benefits'. This is to avoid confusion (refer item 30) with what 'benefit' means in these references.

Item 39 - Paragraph 15(1)(b)

191. This item together with items 30, 38 and 40 amends the SRC Act to replace certain references to 'benefit' with 'death benefits'. This is to avoid confusion (refer item 30) with what 'benefit' means in these references.

Item 40 - Subsection 15(2)

192. This item together with items 30, 38 and 39 amends the SRC Act to replace certain references to 'benefit' with 'death benefits'. This is to avoid confusion (refer item 30) with what 'benefit' means in these references.

193. The heading to section 15 is amended to clarify that the section only applies to complaints made under section 14 of the SRC Act.

Item 41 - After section 15

194. This item inserts after section 15 of the SRC Act new sections 15A, 15B, 15C and 15D.

195. Section 15A comprises four subsections.

196. Subsection 15A(1 ) enables a person who has an interest in a annuity policy to complain to the Tribunal that the conduct of the insurer or representatives of the insurer during the sale process relating to that policy was unfair or unreasonable.

197. Subsection 15A(2) provides that a complaint under this section is to be made by sending a written complaint to the office of the Tribunal.

198. Subsections 15A(3) sets out factors that the Tribunal must take into account, and 15A(4), factors that the Tribunal may take into account in assessing whether the conduct of the insurer was fair and reasonable.

199. Section 15B has six subsections.

200. Subsection 15B(1) enables a person to complain to the Tribunal that a decision of an insurer under an annuity policy is or was unfair or unreasonable. This section is intended to cover decisions relating to the administration of the policy, but not decisions relating to the overall investment strategy or fee structures applied by the life office to a broad class of annuity policy.

201. Subsections 15B(2) and (3) sets out notification procedures which can be used by insurers proposing to pay death benefits under a superannuation policy to protect themselves from the risk of 'double payment' of the death benefit. The provisions are intended to enable insurers to become aware of potential complainants in respect of a proposed distribution of a death benefit, and withhold payment of the death benefit until after the complaint has been dealt with by the Tribunal.

202. Subsection 15B(4) provides that the Tribunal cannot deal with a complaint under this section unless the decision relates to a matter that is particular to the complainant. This is intended to exclude complaints about the overall investment strategy or fee structures applied by the life office to a broad class of annuity policy.

203. Subsection 15B(5) provides that a complaint under this section is to be made by sending a written complaint to the office of the Tribunal.

204. Subsection 15B(6) sets out the factors that the Tribunal must have regard to in determining whether the decision of the insurer is or was unfair or unreasonable.

205. Section 15C sets out who may make a section 15B complaint. Subsection 15C(1) sets out the circumstances in which a person has an interest in the payment of a death benefit under an annuity policy for the purposes of making a complaint under section 15B to the Tribunal. Subsection 15C(2) provides that persons do not have an interest in the payment of such a death benefit if they have not objected to any notice provided by the insurer under paragraph (a) or otherwise fall within the requirements of paragraphs (b) to (d).

206. Section 15D sets out certain complaints the Tribunal cannot deal with.

207. Subsection 15D(1) ensures that certain subject matter can be excluded from the ambit of sections 14A, 15A or 15B by regulation.

208. Subsection 15D(2) ensures that the Tribunal cannot deal with a complaint under section 14A unless the person who is making the complaint, or person through whom the complainant claims to have an interest in the life policy fund to which the complaint relates, was admitted to the fund on or after the day on which the subsection receives the Royal Assent.

209. Subsection 15D(3) ensures that subsection (2) does not preclude a person from making a complaint under section 14 about the decision of a trustee to admit a person to a fund either before, on or after Royal Assent. Where such a complaint is made under section 14, however, the remedies of cancellation, variation or repayment of moneys with interest that are available in respect of complaints made under section 14A (item 69 refers) would not be available.

210. Subsection 15D(4) ensures that the Tribunal cannot deal with a complaint under section 15A unless the person who is making the complaint, or person through whom the complainant claims to have an interest in the policy, either acquired the interest on or after the day on which the Superannuation Industry (Supervision) Legislation Amendment Act 1995 receives the Royal Assent or acquired the interest before that day but had the interest varied on or after that day because of the conduct complained of.

211. Subsection 15D(5) ensures that the Tribunal cannot deal with a complaint under section 15B unless the person who is making the complaint, or person through whom the complainant claims to have an interest in the policy, acquired the interest on or after the day on which the Superannuation Industry (Supervision) Legislation Amendment Act 1995 receives the Royal Assent. With regard to the application of subsections 15D(2) and (4), it is intended that so long as the relevant interest is acquired after Royal Assent, it does not matter that any insurer misconduct which is related to the complaint occurred before that date.

Item 42 - Section 17

Amendment to section 17

212. Section 17 of the SRC Act currently provides that on receipt of a complaint, the Tribunal must follow certain procedures namely acknowledging receipt of the complaint and advising the trustee concerned of details of the complaint and the trustee's obligations to lodge relevant documents with the Tribunal. The amendment to section 17 reflects the introduction, by items 36 and 41 of new types of complaints which can be made to the Tribunal. On receipt of these new sections 14A, 15A and 15B complaints, the amendment provides that the Tribunal will follow largely equivalent procedures to those that currently exist in relation to section 14 complaints.

New section 17A

213. Item 42 also inserts after section 17 of the SRC Act new section 17A. Subsections 17A(1) to (3) prescribe the procedures that must be followed if the Tribunal decides under section 18 (as amended by item 43) that a person should be joined as a party to a complaint. Basically, the procedures are that the Tribunal must advise the new party that they are a party to a complaint and of their obligations under section 24 (as amended by item 52) relating to the provision of relevant documents to the Tribunal. The Tribunal must also inform existing parties that a new party exists.

214. The new section 17A also prescribes the requirements that the Tribunal must inform a party that has applied to be made a party to a complaint, and has had that application rejected, that the application has been rejected and the reasons why it was rejected.

Item 43 - Section 18

215. This item amends section 18 of the SRC Act to set out who the parties to a section 14, 14A, 15A and 15B complaint are.

216. Paragraph (c) enables the Tribunal to join an insurer to a complaint against a trustee in relation to a death or disability benefit where the benefit is provided through a contract of insurance between the insurer and trustee. Paragraph (d) enables the Tribunal to join a person other than a trustee or insurer who has responsibility for determining the existence of total and permanent disablement. Paragraph (e) enables the Tribunal to join any other person who applies to be made a party to the policy.

217. Paragraph (c) of subsection (2) enables the Tribunal to join an insurer as a party to a complaint under 14A in relation to the decision of a trustee to admit a person to a life policy fund. Paragraph (d) of subsection (2) enables the Tribunal to join as a party to the complaint any other person who has applied to become a party to the complaint.

218. Paragraph (c) of subsection (3) enables the Tribunal to join any other person who has applied to be a party to a complaint about the decision of an insurer in relation to an annuity policy under section 15B.

219. Subsection (4) ensures that a person can still be joined as a party to the complaint after the Tribunal has started to deal with the complaint.

Item 44 - Section 19

220. This item amends section 19 of the SRC Act to ensure that paragraphs 19(a) and (b) are confined in their application to complaints made under sections 14 and 14A and do not apply to complaints made under the new sections 15A and 15B (inserted by item 41). Paragraphs 19(a) and (b) state that the Tribunal cannot deal with a complaint that has not previously been made to the appropriate person under arrangements for dealing with such complaints under section 101 of SIS and that the complaint was not settled to the complainant's satisfaction within 90 days.

Item 45 - Section 19

221. This item inserts after subsection 19(1) of the SRC Act subsection 19(2) to provide that complainants who have a complaint under the new sections 15A and 15B (inserted by item 41) must make reasonable attempts to have their complaint resolved by the insurer under the annuity policy to which the complaint relates. It is intended that reasonable efforts should, at minimum, take the form of telephone enquiries or written correspondence with the insurer concerned.

Item 46 - Paragraph 22(2)(b)

222. This item amends paragraph 22(2)(b) of the SRC Act to provide that, where the Tribunal treats a complaint as withdrawn (on the basis that it is satisfied the complainant no longer wants to proceed), the Tribunal must notify all parties to the complaint. Currently they are only required to notify the complainant and trustee.

Item 47 - Paragraph 22(3)(c)

223. This item amends paragraph 22(3)(c) of the SRC Act to remove the reference to 'adequately' in that paragraph. This ensures that the Tribunal does not have to undertake an exhaustive analysis of the processes followed by the other body from whom the complainant has sought a remedy with a view to determining whether those processes are appropriate and effective in handling the complaint.

Item 48 - Paragraph 22(3)(a)

224. This item amends paragraph 22(3)(a) of the SRC Act so that the Tribunal can withdraw a complaint (other than one in relation to decisions of trustees as to total and permanent disablement) if it has been more than 12 months since the decision complained of was taken or the conduct complained of was undertaken. This amendment reflects the fact that complaints can now be made, under the Superannuation Industry (Supervision) Act 1993, in respect of the conduct of entities other than trustees (ie insurers). Complaints relating to trustee decisions in relation to total and permanent disablement are exempt from this provision because of the time limits covering such complaints in subsection 14(6A) to (6D) (item 35 refers).

Item 49 - Subsection 22(4)

225. This item amends subsection 22(4) of the SRC Act to provide that, where the Tribunal treats a complaint as withdrawn (on the basis that it is satisfied the complainant no longer wants to proceed), the Tribunal must notify all parties to the complaint. Currently they are only required to notify the complainant and trustee.

Item 50 - After section 22

226. This item inserts after section 22 of the SRC Act section 22A. Section 22A allows the Tribunal to refer a complaint, or part of a complaint, to another body (other than a court) that has power to deal with such a complaint and is prescribed in the regulations. If the Tribunal does refer a complaint to another body, then it must inform the parties to the complaint that it has done so.

227. If the Tribunal does refer a complaint, or part of a complaint, to another body then the complaint, or that part of the complaint which has been transferred, is regarded as being withdrawn. These amendments are related to the amendments made to section 63 by item 100.

Item 51 - Section 23

228. This item repeals section 23 of the SRC Act and substitutes a new section 23. Section 23 prescribes the situations when a party to a complaint can be represented by another person. Generally a party to a complaint must represent themselves. The exceptions to this rule are where:

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a body corporate or unincorporate may be represented by a responsible officer;

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a party that cannot adequately represent themselves because of a disability may be represented by an agent; or

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any party may be represented by an agent if the Tribunal considers it necessary in all circumstances.

229. This differs from the existing section 23 in that bodies corporate will not have an automatic right to agent representation and persons with a disability will only have a right to agent representation if the disability is one that prevents them from adequately representing themselves. However, the Tribunal has the ability to allow a body corporate, or persons with a disability, agent representation if the Tribunal believes it is necessary given the circumstances.

Item 52 - Section 24

230. This item omits section 24 of the SRC Act and substitutes a new section 24. Section 24 prescribes:

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the documents that must be given (and the time frame within which the documents must be given) to the Tribunal by a trustee or insurer, where a trustee or insurer has been notified under section 17 of a section 14, 14A, section 15A or section 15B complaint;

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the documents that must be given (and the time frame within which the documents must be given) to the Tribunal by an insurer or other decision maker, in the case of a section 14 complaint, where an insurer or other decision maker is notified under subsection 17A(1) that they have been joined under section 18 as a party to the complaint;

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the documents that must be given (and the time frame within which the documents must be given) to the Tribunal by an insurer, in the case of a section 14A complaint, where an insurer is notified under subsection 17A(2) that they have been joined under section 18 as a party to the complaint;

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that the Tribunal may, allow a trustee, insurer, or other decision maker to provide a summary of the documents referred to above if a request to that effect is made within the time frame required to provide those documents;

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the documents that must be given (and the time frame within which the documents must be given) to the Tribunal by:

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in relation to a section 14 complaint - a person, other than an insurer or other decision maker, who has been notified under subsection 17A(l) that they have been joined as a party to the complaint; or

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in relation to a section 14A complaint - a person, other than an insurer, who has been notified under subsection 17A(2) that they have been joined as a party to the complaint;

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in relation to a section 15A or 15B complaint - by a person who has been notified under subsection 17A(3) that they have been joined as a party to the complaint.

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a penalty provision of up to 6 months imprisonment, for a trustee, insurer or any other person joined as a party to a complaint, who intentionally or recklessly fails to comply with these requirements.

Item 53 - After section 24

231. This item inserts after section 24 of the SRC Act new section 24A. New section 24A establishes procedures aimed at ensuring that all persons with an interest in the outcome of a particular complaint relating to the payment of a death benefit are informed of the complaint and given the opportunity to become a party to the complaint. This will enable the Tribunal to consider the interests of all such parties in making any decisions.

232. The way the procedures will work can be summarised as follows:

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once such a complaint is made to the Tribunal the Tribunal will issue a notice (under section 17) to the trustee or insurer concerned;

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within 28 days (or such longer period allowed) the trustee or insurer will then be required to notify all persons whom they believe are likely to have (or claim to have) an interest in the benefit payment that a complaint has been so made and that, to become a party to the complaint, they must advise the Tribunal within 28 days or such longer period as the Tribunal allows;

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the trustee or insurer will then be required to inform the Tribunal of details of the persons that notices have been sent to;

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if a person does not apply within the period allowed then, unless the Tribunal decides otherwise, they will be prevented from later becoming a party to the complaint.

Item 54 - Subsection 25(1)

233. Currently, subsection 25(1) provides that the Tribunal Chairperson may require a trustee who has only lodged copies or summaries of relevant documents with the Tribunal (under section 24) to produce the original documents. The amendment extends the existing provisions so that it now covers persons other than trustees who have lodged copies or summaries of relevant documents under section 24.

Item 55 - Subsection 25(2)

234. This item amends subsection 25(2) of the SRC Act to enable the Tribunal to obtain additional information from persons whose decision or conduct, or whose agents' or representatives' conduct, was complained of. As the subsection stands, the Tribunal can only obtain additional documentation and information from trustees.

Item 56 - Paragraph 25(2)(a)

235. This item omits paragraph 25(2)(a) of the SRC Act and substitutes a new paragraph 25(2)(a) to enable the Tribunal to obtain additional information from persons whose decision or conduct, or whose agents' or representatives' conduct, was complained of. As the subsection stands, the Tribunal can only obtain additional documentation and information from trustees.

Item 57 - Subsection 25(3)

236. This item amends subsection 25(3) of the SRC Act so that the Tribunal can obtain additional documentation and information from persons other than the person whose decision or conduct, or whose agents' or representatives' conduct, was complained of.

Item 58 - Subsection 26(1)

237. This item amends subsection 26(1) of the SRC Act. Subsection 26(1) provides that the making of a complaint to the Tribunal does not affect the operation of the decision to which the complaint relates or prevent the taking of action to implement the decision. Subsection 26(1) has been amended so that it is only applicable to section 14 complaints. A new subsection 26(1A) has been added to ensure the provision covers complaints under section I 5B about decisions of insurers under an annuity policy.

Item 59 - Subsection 26(2)

238. This item amends subsection 26(2) so that it is only applicable to persons making a section 14 complaints. Subsection 26(2) allows the Tribunal to make such order or orders staying or otherwise affecting the operation or implementation of the whole or part of the decision to which the complaint relates.

Item 60 - After subsection 26(2)

239. This item inserts after subsection 26(2) of the SRC Act subsection 26(2A) which allows the Tribunal, on request from a person making a section 15B complaint concerning a decision of an insurer under an annuity policy, to make an order staying the decision of the insurer whose decision is relevant to the subject matter of the complaint.

Item 61 - Subsection 26(3)

240. This item amends subsection 26(3) to ensure that it is applicable to subsection 26(2A). Subsection 26(3) provides that the Tribunal may make an order varying or revoking an order in force under subsection 26(2) to stay the operation or implementation of a decision to which a complaint relates or is relevant to the subject matter of the complaint.

Item 62 - Paragraph 26(4)(a)

241. This item amends paragraph 26(4)(a) to ensure that it is applicable to subsection (2A). Paragraph 26(4)(a) states that the Tribunal must not make an order under subsection 26(2) unless the relevant decision-maker has been given reasonable opportunity to make a submission to the Tribunal in relation to the matter.

Item 63 - Paragraph 26(4)(b)

242. This item amends paragraph 26(4)(b) to ensure that it is applicable to subsection (2A). Paragraph 26(4)(b) states that the Tribunal must not make an order varying or revoking an order in force under subsection 26(2) unless the complainant, the decision-maker concerned and if the order has previously been varied by an order under subsection 26(3), the person who requests the making of that order have been given reasonable opportunity to make a submission to the Tribunal in relation to the matter.

Item 64 - Subparagraph 26(4)(b)(ii)

243. This item amends subparagraph 26(4)(b)(ii) to ensure it is applicable to the decision- maker concerned and not just the trustee.

Item 65 - Subsection 26(5)

244. This item amends subsection 26(5) to ensure that it is applicable to subsection 26(2A). Subsection 26(5) provides that an order in force under subsection 26(2) is subject to conditions as are specified in the order and sets out the period of effect of the order.

Item 66 - Heading to Part 6

245. This item amends the heading to Part 6 of the SRC Act to reflect the fact that complaints can now be made in respect of the conduct of insurers and their representatives. Currently complaints to the Tribunal are limited to complaints about the decisions of trustees.

Item 67 - Heading to Division 2 of Part 6

246. This item amends the heading to Division 2 of Part 6 of the SRC Act to reflect the fact that complaints can now be made in respect of the conduct of insurers and their representatives. Currently complaints to the Tribunal are limited to complaints about the decisions of trustees. Division 2 of Part 6 sets out how the Tribunal informs itself about decisions under review.

Item 68 - Section 36

247. This item amends section 36 of the SRC Act to ensure that it is applicable to conduct under review to reflect the fact that complaints can now be made in respect of the conduct of certain persons. Currently complaints to the Tribunal are limited to complaints about the decisions of trustees. Section 36 sets out the procedures of Tribunal review meetings.

Item 69 - Section 37

248. This item repeals section 37 of the SRC Act and substitutes new sections 37, 37A, 37B and 37C.

249. Section 37 sets out the Tribunal powers in relation to section 14 complaints. Subsection 37(3) sets out the determinations the Tribunal must make in relation to a section 14 complaint. Subsection 37(6) states that the Tribunal must affirm a decision referred to in subsection (3) if the decision is fair and reasonable in the circumstances.

250. Section 37A sets out the Tribunal's powers in respect of a section 14A complaint concerning the decision of a trustee to admit the person as a member of the fund. Subsections 37A(2) sets out the determinations the Tribunal must make in relation to a section 14A complaint. Subsection 37A(7) provides, in effect, that the Tribunal must not take action to set aside the policy, vary its terms or require repayment of moneys with interest in accordance with paragraph 37A(3)(a) if the decision of the trustee or person acting for the trustee was fair and reasonable.

251. Section 37B sets out the Tribunal powers in respect of a section 15A complaint concerning the sale of an annuity policy. Subsection 37B(2) sets out the determinations the Tribunal must make in relation to a section 15A complaint about an insurer. Subsection 37B(4) provides that the Tribunal must not take action to set aside the policy, vary its terms or require repayment of moneys with interest if the conduct of the insurer was fair and reasonable.

252. Section 37C sets out the Tribunal powers in respect of section 15B complaint concerning a decision under an annuity policy. Subsection 37C(2) sets out the determinations the Tribunal must make in relation to a section 15B complaint. Subsection 37C(5) provides that the Tribunal must affirm a decision referred to in subsection 37C(2) if the decision is fair and reasonable.

Item 70 - Transitional

253. This item provides transitional arrangements for complaints that have already been made to the Tribunal under section 14 of the SRC Act as in force at any time before the day on which this Act receives the Royal Assent. For the purpose of undertaking or completing a review of such a complaint, the complaint is treated as if it had been made under the SRC Act as amended by this Act.

254. If a determination has been made under the SRC Act in relation to a complaint, that determination is treated, on and after the date on which this Act receives the Royal Assent, as if it were a determination made in respect of the complaint under the Principal Act as amended by this Act.

Item 71 - Subsection 41(3)

255. This item omits subsection 41(3) and substitutes a new subsection 41(3) to ensure that a decision of a trustee, insurer or other decision-maker as varied by the Tribunal, or a decision made by the Tribunal in substitution for a such decision to be a decision of a trustee, insurer or other decision-maker concerned. Currently, only the decision of a trustee is covered by this subsection.

Item 72 - Section 43

256. This item inserts a reference to Deputy Chairperson in section 43 of the SRC Act to ensure that the Deputy, who may preside at a review meeting, is empowered to certify that a document purporting to be a determination is, in any proceeding, prima facie evidence of the determination.

Item 73 - Subsection 44(2)

257. This item amends subsection 44(2) to restrict the operation of subsection 44(2) to section 14 complaints. Section 44(2) allows the Tribunal to direct the trustee to notify certain parties of the Tribunal's determination.

Item 74 - Subsection 44(3)

258. This item amends subsection 44(3) to extend its application from trustees to also include insurers. Subsection 44(3) prescribes a penalty provision for a trustee who intentionally or recklessly fails to comply with a direction under subsection 44(2).

Item 75 - Subsection 47(2)

259. This item omits subsection 47(2) of the SRC Act and substitutes new subsections 47(2), (2A) and (2B) which, if an appeal is brought to the Federal Court from a determination of the Tribunal, allows the court to make an order staying or otherwise affecting the operation or implementation of the determination of the Tribunal and or the decision of the trustee, insurer or other decision-maker as the court thinks appropriate for complaints made under section 14, 14A, 15A or 15B.

Item 76 - Saving

260. This item has the effect that despite the amendments of section 47 of the SRC Act made by this Act, any order of the Federal Court of Australia made before the day those amendments come into force, continues to have effect as if it was an order of that court made under section 47 as amended by this Act.

Item 77 - Subsection 47(3)

261. This item amends subsection 47(3) to ensure that it is applicable to subsections (2A) and (2B). Subsection 47(3) provides that an order is in force under subsection (2) then the Court may make an order varying or revoking the order.

Item 78 - Subsection 47(4)

262. This item amends subsection 47(4) to ensure that it is applicable to subsections (2A) and (2B). Subsection 47(4) sets out the period of effect of an order made under subsection (2).

Item 79 - Heading to Division 1 of Part 8

263. This item amends the heading to Division 1 of Part 8 to reflect the addition of a Deputy Chairperson to the Tribunal. Division 1 of Part 8 sets out the administrative provisions relating to the Tribunal Chairperson.

Item 80 - Subsection 49(1)

264. This item makes consequential amendments to subsection 49(1), which sets out the terms and conditions of appointment of the Chairperson, to include references to the Deputy Chairperson.

Item 81 - Subsection 49(2)

265. This item makes consequential amendments to subsection 49(2), which sets out the terms and conditions of appointment of the Chairperson, to include references to the Deputy Chairperson.

Item 82 - Section 50

266. This item amends section 50 of the SRC Act to reflect the addition of a Deputy Chairperson to the Tribunal. Section 50 provides for the remuneration of the Tribunal Chairperson.

Item 83 - Subsection 51(1)

267. This item amends subsection 51(1) to reflect the addition of a Deputy Chairperson to the Tribunal. Subsection 51(1) provides for the recreation entitlements of the Tribunal Chairperson.

Item 84 - Subsection 51(2)

268. This item amends subsection 51(2) to reflect the addition of a Deputy Chairperson to the Tribunal. Subsection 51(2) provides for other leave entitlements for the Tribunal Chairperson.

Item 85 - Section 52

269. This item inserts after subsection 52(1) of the SRC Act subsection 52(2) to provide that the Deputy Chairperson may resign from office by delivering to the Minister a signed notice of resignation.

Item 86 - After subsection 53(1)

270. This item amends subsection 53(1), which provides that the Governor-General may terminate the appointment of the Chairperson, to include a reference to the Deputy Chairperson.

Item 87 - Subsection 53(2)

271. This item amends subsection 53(2) which sets out the circumstances in which the Governor-General must terminate the appointment of the Tribunal Chairperson, to include references to the Tribunal Deputy Chairperson.

Item 88 - After subsection 54(1)

272. This item inserts after subsection 54(1) of the SRC Act subsection 54(1A) which allows the Minister to appoint a person, who is eligible, to act as Tribunal Deputy Chairperson.

Item 89 - After subsection 54(2)

273. This item inserts after subsection 54(2) of the SRC Act subsection 54(2A) to allow the Minister the appoint a person who is eligible to act as Tribunal Deputy Chairperson if the Tribunal Deputy Chairperson has given notice under subsection 10(1) of the SRC Act.

Item 90 - Subsection 54(3)

274. This item amends subsection 54(3) so that it is applicable to the new subsections 54(1A) and (2A). Subsection 54(3) provides for the validity of action under subsection (1) and (2).

275. The heading to section 54 is altered to reflect the addition of a Tribunal Deputy Chairperson. Section 54 provides for the appointment of an acting Tribunal Chairperson.

Item 91 - Section 55

276. This item amends section 55 of the SRC Act so that it excludes the Deputy Chairperson from its operation. Section 55 sets out the terms and conditions of appointment of Tribunal members other than the Tribunal Chairperson.

Item 92 - Subsection 56(1)

277. This item amends subsection 56(1) of the SRC Act to exclude the Deputy Chairperson from its operation. Subsection 56(1) provides for the remuneration of Tribunal members other than the Tribunal Chairperson.

Item 93 - Section 57

278. This item amends section 57 of the SRC Act to exclude the Deputy Chairperson from its operation. Section 57 provides for the resignation of Tribunal members other that the Tribunal Chairperson.

Item 94 - Section 58

279. This item amends section 58 of the SRC Act to exclude the Deputy Chairperson from its operation. Section 58 provides for the termination of the appointment of Tribunal members other than the Tribunal Chairperson.

Item 95 - Subsection 59(1)

280. This item amends subsection 59(1) of the SRC Act to reflect the amendments to section 18 inserted by item 43, amendments to sections 23 and 24 inserted by items 51 and 52 respectively, the addition of sections 22A and 24A inserted by items 50 and 53 respectively and is intended to ensure that a Deputy Chairperson is able to exercise the powers under those provisions.

Item 96 - Subsection 59(2)

281. This item omits subsection 59(2) of the SRC Act and substitutes a new subsection 59(2) which sets out the powers of the Tribunal which must be exercised by the Tribunal Chairperson and sets out the powers of the Tribunal which can be exercised by the Tribunal Chairperson or the Tribunal Deputy Chairperson.

Item 97 - Paragraph 60(2)(a)

282. This item amends paragraph 60(2)(a) of the SRC Act to insert 'administration' and 'administrator'. This amendment is necessary to make this provision consistent with the terminology used in Part 5.3A of the Corporations Law.

Item 98 - Subsection 63(2)

283. This item amends subsection 63(2) of the SRC Act to reflect the fact that complaints can now be made in respect of the conduct and decisions of insurers and their agents and representatives under the proposed sections 15A and 15B (inserted by item 41). Subsection 63(2) prohibits the recording or disclosure of information acquired in relation to a complaint made under this Act except for the purposes of this Act.

Item 99 - Subsection 63(3)

284. This item amends subsection 63(3) of the SRC Act to allow the Tribunal to disclose information to a particular party to the complaint if the person who provided the information consents. Currently information can only be disclosed to the trustee if the person who made the complaint consents.

Item 100 - After subsection 63(3)

285. This item inserts new section subsections 63(3A) and 63(3B) which work in conjunction with new section 22A (inserted by item 50).

286. New subsection (3A) provides that information can be passed to another complaints handling body in accordance with the referral of a complaint under new section 22A.

287. New subsection (3B) prevents the disclosure of personal information relating to an individual to such a body without the individuals written consent.

Item 101 - Subsection 65(1)

288. This item amends subsection 65(1) of the SRC Act to require the notification of a failure of a party to a complaint to give effect to a determination made by the Tribunal. Currently, the subsection only applies to the failure of a trustee of a fund to give effect to a determination made by the Tribunal.

Item 102 - Subsection 65(2)

289. This item amends subsection 65(2) of the SRC Act so that if the Tribunal remits a matter to a party to a complaint for reconsideration in accordance with the directions of the Tribunal, the party must reconsider the matter in accordance with those directions. Currently, the subsection only applies to a trustee.