Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 (171 of 2012)
Schedule 7 Eligible rollover funds
Part 1 Main amendments
Superannuation Industry (Supervision) Act 1993
15 After section 242
Insert:
Division 2 - Authority to operate an eligible rollover fund
Subdivision A - Applying for authority
242A Application for authority to operate an eligible rollover fund
Who may apply?
(1) An RSE licensee of a prescribed class may apply to APRA for authority to operate a regulated superannuation fund as an eligible rollover fund.
Requirements for applications
(2) An application for authority to operate a regulated superannuation fund as an eligible rollover fund must:
(a) be in the approved form; and
(b) contain the information required by the approved form; and
(c) state the RSE licensee's and the fund's ABNs; and
(d) be accompanied by an election made in accordance with each of the following sections:
(i) section 242B;
(ii) section 242C.
(3) If:
(a) an RSE licensee applies for authority to operate a regulated superannuation fund as an eligible rollover fund; and
(b) after the application is made, but before APRA decides the application, information contained in the application ceases to be correct;
the RSE licensee must give APRA the correct information, in writing, as soon as practicable after the information in the application ceases to be correct.
(4) An application is taken not to comply with this section if subsection (3) is contravened.
Note: APRA cannot give authority to operate a regulated superannuation fund as an eligible rollover fund while the application does not comply with this section: see paragraph 242F(1)(a).
Lapsed applications
(5) An application for authority lapses if:
(a) it was made by an RSE licensee; and
(b) the RSE licensee ceases to be an RSE licensee,or an RSE licensee of a class prescribed for the purposes of subsection (1),before:
(i) APRA makes a decision on the application for authority; or
(ii) if APRA's decision with respect to the application is subject to review under this Act - the review is finally determined or otherwise disposed of.
242B Election to transfer amounts held in eligible rollover fund if authorisation cancelled
An RSE licensee that applies for authority to operate a regulated superannuation fund as an eligible rollover fund makes an election in accordance with this section if:
(a) the RSE licensee elects:
(i) to take the action required under the prudential standards in relation to amounts held in the eligible rollover fund, if the authority to operate the fund as an eligible rollover fund is cancelled under subsection 242J(1); and
(ii) to do so before the end of a period of 90 days beginning on the day on which notice of the cancellation is given to the RSE licensee under subsection 242J(3); and
(b) the election is in writing; and
(c) the election is in the approved form.
242C Election not to charge members of eligible rollover fund for payment of conflicted remuneration
(1) An RSE licensee that applies for authority to operate a regulated superannuation fund as an eligible rollover fund makes an election in accordance with this section if:
(a) the RSE licensee elects that, if the authority is given, the RSE licensee will not charge any member of the fund a fee all or part of which relates directly or indirectly to costs incurred by a trustee or the trustees of the fund:
(i) in paying conflicted remuneration to a financial services licensee, or a representative of a financial services licensee; or
(ii) in paying an amount to another person that a trustee of the fund knows, or reasonably ought to know, relates to conflicted remuneration paid by that other person to a financial services licensee, or a representative of a financial services licensee; and
(b) the election is in writing; and
(c) the election is in the approved form.
(2) In this section:
conflicted remuneration has the same meaning as in Part 7.7A of the Corporations Act 2001, subject to the extension of that meaning in subsection (3).
representative , of a financial services licensee, has the same meaning as in Part 7.6 of the Corporations Act 2001.
(3) In this section, conflicted remuneration also has the meaning it would have if:
(a) financial product advice provided to the RSE licensee mentioned in subsection (1) by a financial services licensee, or a representative of a financial services licensee, mentioned in subparagraph (1)(a)(i) or (ii) were provided to the RSE licensee as a retail client; and
(b) financial product advice provided to the other person mentioned in subparagraph (1)(a)(ii) by a financial services licensee, or a representative of a financial services licensee, mentioned in that subparagraph were provided to the other person as a retail client.
242D APRA may request further information
APRA may give an RSE licensee that has applied for authority to operate a regulated superannuation fund as an eligible rollover fund a notice requesting the RSE licensee to give APRA, in writing, specified information relating to the application.
Note: A failure to give the requested information delays the time within which APRA must decide the application: see paragraph 242E(1)(b).
242E Period for deciding applications for authority
(1) APRA must decide an application by an RSE licensee for authority to operate a regulated superannuation fund as an eligible rollover fund:
(a) within 60 days after receiving the application; or
(b) if the applicant was requested to provide information under section 242D - within 60 days after:
(i) receiving from the RSE licensee all of the information the RSE licensee was requested to provide under that section; or
(ii) all notices relating to that information being disposed of;
unless APRA extends the period for deciding the application under subsection (2).
(2) APRA may extend the period for deciding an application by an RSE licensee for authority to operate a regulated superannuation fund as an eligible rollover fund by up to 60 days if APRA informs the RSE licensee of the extension:
(a) in writing; and
(b) within the period in which it would otherwise be required to decide the application under subsection (1).
(3) If APRA extends the period for deciding an application for authority to operate a regulated superannuation fund as an eligible rollover fund, it must decide the application within the extended period.
(4) If APRA has not decided an application for authority to operate a regulated superannuation fund as an eligible rollover fund by the end of the period by which it is required to decide the application, APRA is taken to have decided, at the end of the last day of that period, to refuse the application.
Subdivision B - Authority
242F Authority to operate an eligible rollover fund
(1) APRA must authorise an RSE licensee to operate a regulated superannuation fund as an eligible rollover fund if, and only if:
(a) the application for authority complies with section 242A; and
(b) the applicant has provided to APRA all information that the applicant was requested, under section 242D, to provide, or the request has been disposed of; and
(c) the fund is registered under Part 2B; and
(d) the RSE licensee is of a class prescribed for the purposes of subsection 242A(1); and
(e) APRA is satisfied that, under the governing rules of the fund:
(i) the only purpose of the fund is to be a temporary repository for amounts transferred to the fund from other regulated superannuation funds in circumstances allowed by the RSE licensee law; and
(ii) a single diversified investment strategy is to be adopted in relation to all assets of the fund; and
(f) APRA is satisfied that the RSE licensee is likely to comply with the enhanced trustee obligations for eligible rollover funds; and
(g) APRA is satisfied that the directors of the RSE licensee are likely to comply with the enhanced director obligations for eligible rollover funds; and
(h) APRA is satisfied that the RSE licensee is likely to comply with the general fees rules; and
(i) APRA is satisfied that the RSE licensee is not likely to contravene section 242P.
(2) Otherwise APRA must refuse to give the authority.
242G Notice of authority
If APRA authorises an RSE licensee to operate a regulated superannuation fund as an eligible rollover fund, APRA must notify the RSE licensee in writing of the authority.
242H APRA to give notice of refusal of authority
If APRA refuses an application by an RSE licensee for authority to operate a regulated superannuation fund as an eligible rollover fund, APRA must take all reasonable steps to ensure that the RSE licensee is given a notice:
(a) informing it of APRA's refusal of the application; and
(b) setting out the reasons for the refusal;
as soon as practicable after refusing the application.
Subdivision C - Cancelling authority
242J Cancelling authority to operate eligible rollover fund
(1) APRA may, in writing, cancel an authority to operate a regulated superannuation fund as an eligible rollover fund.
(2) Without limiting subsection (1), APRA may cancel an authority to operate a regulated superannuation fund as an eligible rollover fund if:
(a) APRA is no longer satisfied that, under the governing rules of the fund:
(i) the only purpose of the fund is to be a temporary repository for amounts transferred to the fund from other regulated superannuation funds in circumstances allowed by the RSE licensee law; and
(ii) a single diversified investment strategy is to be adopted in relation to all assets of the fund; or
(b) APRA is no longer satisfied that the RSE licensee is likely to comply with the enhanced trustee obligations for eligible rollover funds (whether because of a previous failure to do so, or for any other reason); or
(c) APRA is no longer satisfied that the directors of the RSE licensee are likely to comply with the enhanced director obligations for eligible rollover funds (whether because of a previous failure to do so, or for any other reason); or
(d) APRA is no longer satisfied that the RSE licensee is likely to comply with the general fees rules (whether because of a previous failure to do so, or for any other reason); or
(e) APRA is no longer satisfied that the RSE licensee is not likely to contravene section 242P (whether because of a previous contravention of that section, or for any other reason); or
(f) the fund ceases to be registered under Part 2B; or
(g) the RSE licensee ceases to be of a class prescribed for the purposes of subsection 242A(1);or
(h) APRA is satisfied that the RSE licensee has contravened a provision of the governing rules of the eligible rollover fund; or
(i) APRA is satisfied that the RSE licensee has failed to give effect to an election made in accordance with section 242C (election not to pass costs of conflicted remuneration to members of eligible rollover fund).
(3) If APRA cancels an authority to operate a regulated superannuation fund as an eligible rollover fund it must take all reasonable steps to ensure that the RSE licensee is given a notice informing the RSE licensee:
(a) that APRA has cancelled the authority; and
(b) of the reasons for the cancellation.
Subdivision D - Trustee obligations relating to eligible rollover funds
242K Additional obligations of a trustee in relation to an eligible rollover fund
Each trustee of an eligible rollover fund must promote the financial interests of the beneficiaries of the fund, in particular returns to those beneficiaries (after the deduction of fees, costs and taxes).
242L Additional obligations of a director of a corporate trustee in relation to an eligible rollover fund
(1) Each director of a corporate trustee of an eligible rollover fund must exercise a reasonable degree of care and diligence for the purposes of ensuring that the corporate trustee carries out the obligations referred to in section 242K.
(2) The reference in subsection (1) to a reasonable degree of care and diligence is a reference to the degree of care and diligence that a superannuation entity director would exercise in the corporate trustee's circumstances.
242M Contravention of section 242K or 242L
(1) A person must not contravene section 242K or 242L.
(2) Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.
(3) A contravention of subsection (1) does not result in the invalidity of a transaction.
242N Governing rules void to the extent that they are inconsistent with obligations under section 242K or 242L
A provision of the governing rules of an eligible rollover fund is void to the extent that it is inconsistent with:
(a) the obligations that apply to a trustee of the fund under section 242K; or
(b) the obligations that apply to the directors of a corporate trustee of the fund under section 242L.
Subdivision E - Miscellaneous
242P Operating a fund as an eligible rollover fund when not authorised to do so
(1) A person commits an offence if:
(a) the person makes a representation; and
(b) the representation is that a regulated superannuation fund is an eligible rollover fund; and
(c) the RSE licensee for the fund does not have authority to operate the fund as an eligible rollover fund.
Penalty: 60 penalty units.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
(2) Subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
242Q Prudential standards dealing with amounts held in eligible rollover funds
A prudential standard determined under section 34C may include provisions:
(a) requiring an RSE licensee whose authority to operate a regulated superannuation fund as an eligible rollover fund is cancelled under subsection 242J(1) to transfer any amounts held in the eligible rollover fund to a regulated superannuation fund that:
(i) is an eligible rollover fund; or
(ii) offers a MySuper product; and
(b) setting out the requirements that must be met in relation to the transfer of such amounts; and
(c) dealing with other matters relating to such amounts.
242R No liability for giving effect to a section 242B election
A trustee of a regulated superannuation fund is not subject to any liability to a member of the fund for an action taken to give effect to an election made in accordance with section 242B.