Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019 (40 of 2019)
Schedule 5 APRA directions power
Superannuation Industry (Supervision) Act 1993
11 After Part 16
Insert:
Part 16A - APRA's powers to issue directions
Division 1 - General powers to issue directions
131D APRA may give directions to an RSE licensee in relation to licensee's own conduct
(1) APRA may give an RSE licensee a direction of a kind mentioned in subsection (2) if APRA has reason to believe that:
(a) the RSE licensee has contravened a provision of:
(i) this Act; or
(ii) the regulations; or
(iii) the prudential standards; or
(ii) the Financial Sector (Collection of Data) Act 2001; or
(b) the RSE licensee is likely to contravene a provision mentioned in paragraph (a), and the direction is reasonably necessary to deal with one or more prudential matters in relation to the RSE licensee; or
(c) the RSE licensee has contravened a condition or direction under this Act or the Financial Sector (Collection of Data) Act 2001; or
(ca) the RSE licensee, or the registrable superannuation entity of the RSE licensee, has failed to meet a benchmark that relates to the licensee or entity; or
(d) the direction is necessary in the interests of beneficiaries of a registrable superannuation entity of the RSE licensee; or
(e) the RSE licensee is, or is about to become, unable to meet its liabilities (whether as trustee of a registrable superannuation entity or otherwise); or
(f) there is, or there might be, a material risk to the security of the assets of the RSE licensee (whether held as trustee of a registrable superannuation entity or otherwise); or
(g) there has been, or there might be, a material deterioration in the financial condition of:
(i) the RSE licensee; or
(ii) a registrable superannuation entity of which it is trustee; or
(h) the RSE licensee is conducting:
(i) its affairs; or
(ii) the affairs of a registrable superannuation entity of which it is trustee;
in an improper or financially unsound way; or
(i) the failure to issue a direction would materially prejudice the interests or reasonable expectations of beneficiaries of a registrable superannuation entity of the RSE licensee; or
(j) the RSE licensee is conducting:
(i) its affairs; or
(ii) the affairs of a registrable superannuation entity of which it is trustee;
in a way that may cause or promote instability in the Australian financial system.
(2) APRA may give a direction to do one or more of the following:
(a) to comply with the whole or a part of:
(i) this Act; or
(ii) the regulations; or
(iii) the prudential standards; or
(ii) the Financial Sector (Collection of Data) Act 2001;
(b) to comply with the whole or a part of a condition or direction referred to in paragraph (1)(c);
(c) if the RSE licensee is a body corporate, to do one or more of the following:
(i) to remove a responsible officer of the RSE licensee from office;
(ii) to ensure that a responsible officer of the RSE licensee does not take part in the management or conduct of the business of the RSE licensee, or the business of a registrable superannuation entity of the RSE licensee, except as permitted by APRA;
(iii) to appoint a person as a responsible officer of the RSE licensee for such term as APRA directs;
(d) to order an audit of:
(i) the affairs of the RSE licensee; or
(ii) the affairs of a registrable superannuation entity of the RSE licensee;
at the expense of the RSE licensee, by an auditor chosen by APRA;
(e) to remove an auditor of the RSE licensee, or of a registrable superannuation entity of the RSE licensee, from office and appoint another auditor to hold office for such term as APRA directs;
(f) to order an actuarial investigation of the affairs of a registrable superannuation entity of the RSE licensee, at the expense of the RSE licensee and by an actuary chosen by APRA;
(g) to remove an actuary of a registrable superannuation entity of the RSE licensee from office and appoint another actuary to hold office for such term as APRA directs;
(h) not to accept, or to cease to accept (permanently or temporarily), contributions to a registrable superannuation entity of the RSE licensee;
(i) not to borrow any amount;
(j) not to pay or transfer any amount or asset to any person, or create an obligation (contingent or otherwise) to do so;
(k) not to undertake any financial obligation (contingent or otherwise) on behalf of any other person;
(l) not to discharge any liability of:
(i) the RSE licensee; or
(ii) a registrable superannuation entity of the RSE licensee;
(m) to make changes to the RSE licensee's systems, business practices or operations (including the RSE licensee's systems business practices or operations in relation to a registrable superannuation entity of the RSE licensee);
(n) to do, or refrain from doing, anything else in relation to the affairs of:
(i) the RSE licensee; or
(ii) a registrable superannuation entity of the RSE licensee.
(3) A direction under paragraph (2)(j) not to pay or transfer any amount or asset does not apply to the payment or transfer of money pursuant to an order of a court or a process of execution.
(4) Without limiting the generality of subsection (2), a direction referred to in a paragraph of that subsection may:
(a) deal with some only of the matters referred to in that paragraph; or
(b) deal with a particular class or particular classes of those matters; or
(c) make different provision with respect to different matters or different classes of matters.
(5) The direction may deal with the time by which, or period during which, it is to be complied with.
131DA APRA may give directions in relation to the conduct of a connected entity of an RSE licensee
(1) APRA may give an RSE licenseea direction of a kind mentioned in subsection (5), or a direction to cause a connected entity of the RSE licensee to do or not to do something of a kind mentioned in subsection (5), if APRA has reason to believe that:
(a) a connected entity of the RSE licensee has contravened a provision of:
(i) this Act; or
(ii) the regulations; or
(iii) the prudential standards; or
(ii) the Financial Sector (Collection of Data) Act 2001; or
(b) a connected entity of the RSE licensee is likely to contravene a provision mentioned in paragraph (a); or
(c) the direction relates to a connected entity of the RSE licensee and is necessary in the interests of beneficiaries of a registrable superannuation entity of the RSE licensee; or
(d) a connected entity of the RSE licensee is, or is about to become, unable to meet the connected entity's liabilities; or
(e) there is, or there might be, a material risk to the security of the assets of a connected entity of the RSE licensee; or
(f) there has been, or there might be, a material deterioration in the financial condition of a connected entityof the RSE licensee; or
(g) a connected entity of the RSE licensee is conducting the entity's affairs in an improper or financially unsound way; or
(h) a connected entity of the RSE licensee is conducting the entity's affairs in a way that may cause or promote instability in the Australian financial system; or
(i) a connected entity of the RSE licensee is conducting the entity's affairs in a way that may cause it to be unable to continue to supply products or services to the RSE licensee, or a registrable superannuation entity of the RSE licensee; or
(j) the direction relates to a connected entity of the RSE licensee and the failure to issue a direction would materially prejudice the interests of beneficiaries of a registrable superannuation entity of the RSE licensee.
(2) However, APRA can only make a direction under subsection (1) as a result of a ground referred to in paragraph (1)(d), (e), (f), (g), (h) or (i) if APRA considers that the direction is reasonably necessary to ensure that the RSE licensee's duties as trustee of a registrable superannuation entity are properly performed.
(3) APRA may give a connected entity of an RSE licensee a direction of a kind mentioned in subsection (5) if:
(a) APRA has given the RSE licensee a direction under subsection (1) because one or more of the grounds referred to in that subsection have been satisfied in respect of the connected entity; or
(b) APRA may give the RSE licensee a direction under subsection (1) because one or more of the grounds referred to in that subsection have been satisfied in respect of the connected entity.
(4) APRA cannot give a direction under subsection (3) to a connected entity of a kind specified in regulations (if any) made for the purposes of this subsection.
(5) APRA may give a direction to do one or more of the following:
(a) to comply with the whole or a part of:
(i) this Act; or
(ii) the regulations; or
(iii) the prudential standards; or
(ii) the Financial Sector (Collection of Data) Act 2001;
(b) if the connected entity is a body corporate:
(i) to remove a responsible officer of the entity from office; or
(ii) to ensure that a responsible officer of the entity does not take part in the management or conduct of the business of the entity (including any business the entity conducts in relation to a registrable superannuation entity of the RSE licensee) except as permitted by APRA; or
(iii) to appoint a person as a responsible officer of the entity for such term as APRA directs;
(c) to order an audit of:
(i) the affairs of the connected entity; or
(ii) the affairs of a registrable superannuation entity of the RSE licensee;
at the expense of the connected entity, by an auditor chosen by APRA;
(d) to:
(i) remove from office an auditor of the connected entity, or of a registrable superannuation entity of the RSE licensee; and
(ii) appoint another auditor to hold office for such term as APRA directs;
(e) to order an actuarial investigation of the affairs of a registrable superannuation entity of the RSE licensee, at the expense of the connected entity and by an actuary chosen by APRA;
(f) to:
(i) remove from office an actuary of a registrable superannuation entity of the RSE licensee; and
(ii) appoint another actuary to hold office for such term as APRA directs;
(g) not to borrow any amount;
(h) not to pay or transfer any amount or asset to any person, or create an obligation (contingent or otherwise) to do so;
(i) not to undertake any financial obligation (contingent or otherwise) on behalf of any other person;
(j) not to discharge any liability of one or more of the following:
(i) the connected entity;
(ii) a registrable superannuation entity of the RSE licensee;
(k) to make changes to the connected entity's systems, business practices or operations (including the connected entity's systems, business practices or operations in relation to a registrable superannuation entity of the RSE licensee);
(l) to do, or refrain from doing, anything else in relation to the affairs of:
(i) the connected entity; or
(ii) a registrable superannuation entity of the RSE licensee.
(6) A direction under paragraph (5)(h) not to pay or transfer any amount or asset does not apply to the payment or transfer of money pursuant to an order of a court or a process of execution.
(7) Without limiting the generality of subsection (5), a direction referred to in a paragraph of that subsection may:
(a) deal with some only of the matters referred to in that paragraph; or
(b) deal with a particular class or particular classes of those matters; or
(c) make different provision with respect to different matters or different classes of matters.
(8) The direction may deal with the time by which, or period during which, it is to be complied with.
131DB Machinery provisions relating to directions under this Division
(1) A direction under this Division must:
(a) be given by notice in writing:
(i) in the case of a direction to an RSE licensee under subsection 131D(1) or 131DA(1) - to the RSE licensee; and
(ii) in the case of a direction to a connected entity of an RSE licensee under subsection 131DA(3) - to the connected entity of the RSE licensee and the RSE licensee; and
(b) specify:
(i) in the case of a direction under subsection 131DA(3) - the ground referred to in subsection 131DA(1) as a result of which the direction is given; or
(ii) otherwise - the ground referred to in subsection 131D(1) or 131DA(1) as a result of which the direction is given.
(2) A direction under this Division is not a legislative instrument.
Note: Under paragraph 11(2)(c) of the Legislation Act 2003, APRA may register a direction under this Division as a notifiable instrument.
(3) In deciding whether to give a direction under subsection 131D(1) to an RSE licensee, APRA may disregard any external support for the RSE licensee.
(4) In deciding whether to give a direction under subsection 131DA(1) or (3), APRA may disregard any external support for the RSE licensee, or the connected entity of the RSE licensee, in relation to which the direction is given.
(5) The regulations may specify that a particular form of support is not external support for the purposes of subsection (3) or (4).
131DC Varying or revoking a direction under this Division
(1) APRA may:
(a) vary a direction given to an RSE licensee under this Division, by notice in writing to the RSE licensee; or
(b) vary a direction given to a connected entity of an RSE licensee under this Division, by notice in writing to the connected entity and the RSE licensee;
if, at the time of the variation, APRA considers that the variation is necessary and appropriate.
(2) A direction under this Division has effect until APRA revokes it.
(3) APRA may:
(a) revoke a direction given to an RSE licensee under this Division, by notice in writing to the RSE licensee; or
(b) revoke a direction given to a connected entity of an RSE licensee under this Division, by notice in writing to the connected entity and the RSE licensee;
if, at the time of revocation, APRA considers that the direction is no longer necessary or appropriate.
131DD Non-compliance with a direction
Failure to comply with a direction given to an RSE licensee - failure by the RSE licensee
(1) A person commits an offence if:
(a) the person is an RSE licensee or a member of a group of individual trustees that is an RSE licensee; and
(b) a direction is given to the RSE licensee under this Division; and
(c) the RSE licensee does, or fails to do, something; and
(d) doing, or failing to do, the thing results in a contravention of the direction.
Penalty: 100 penalty units.
Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.
Failure to comply with a direction given to an RSE licensee - failure by an officer of the RSE licensee
(2) A person commits an offence if:
(a) the person is an officer of an RSE licensee that is a body corporate; and
(b) the officer fails to take reasonable steps to ensure that the RSE licensee complies with a direction given to it under this Division; and
(c) the officer's duties include ensuring that the RSE licensee complies with the direction or with a class of directions that includes the direction; and
(d) the RSE licensee does not comply with the direction.
Penalty: 100 penalty units.
Failure to comply with a direction given to a connected entity of an RSE licensee - failure by the connected entity
(3) A connected entity of an RSE licensee commits an offence if:
(a) a direction is given to the connected entity under this Division; and
(b) the connected entity does, or fails to do, something; and
(c) doing, or failing to do, the thing results in a contravention of the direction.
Penalty: 100 penalty units.
Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.
Failure to comply with a direction given to a connected entity of an RSE licensee - failure by an officer of the connected entity
(4) A person commits an offence if:
(a) the person is an officer of a body corporate that is a connected entity of an RSE licensee; and
(b) the officer fails to take reasonable steps to ensure that the connected entity complies with a direction given to it under this Division; and
(c) the officer's duties include ensuring that the connected entity complies with the direction or with a class of directions that includes the direction; and
(d) the connected entity fails to comply with the direction.
Penalty: 100 penalty units.
Offence for each day on which a person continues to commit an offence
(5) If a person commits an offence against subsection (1), (2), (3) or (4), the person commits an offence against that subsection in respect of:
(a) the first day on which the offence is committed; and
(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).
Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.
Strict liability
(6) Subsections (1), (2), (3) and (4) are offences of strict liability.
Meaning of officer
(7) In this section, officer has the meaning given by section 9 of the Corporations Act 2001.
Division 3 - Provisions relating to all directions under this Act
131F APRA may give more than one direction
(1) APRA is not precluded from giving a direction under a provision of this Act because APRA has given, or may give, another direction under that or any other provision of this Act.
(2) The kinds of direction that may be given under one provision of this Act are not limited by any direction given, or that may be given, under that or any other provision of this Act.
131FA RSE licensee and connected entity have power to comply with a direction under this Act
(1) An RSE licensee has power to comply with a direction given to the RSE licensee under this Act despite anything in its constitution or any contract or arrangement to which it is a party.
(2) If the direction requires the RSE licensee to cause a connected entity to do, or not to do, something:
(a) the RSE licensee has power to cause the connected entity to do, or to not to do, the thing; and
(b) the connected entity has power to do, or not to do, the thing;
despite anything in the connected entity's constitution or any contract or arrangement to which the connected entity is a party.
(3) A connected entity of an RSE licensee has power to comply with a direction given to the connected entity under this Act despite anything in its constitution or any contract or arrangement to which it is a party.
131FB Protection from liability - general
(1) A person is not subject to any liability to any person in respect of anything done, or omitted to be done, in good faith and without negligence in the exercise or performance, or the purported exercise or performance, of powers, functions or duties under this Act.
(2) To avoid doubt, any information provided by a person to APRA under section 130A is taken, for the purposes of subsection (1), to be provided in the exercise of a power or the performance of a function under this Act.
(3) Subsection (1) does not apply to a person referred to in section 58 of the Australian Prudential Regulation Authority Act 1998 and, to avoid doubt, does not affect the operation of that section.
131FC Protection from liability - directions
(1) An action, suit or proceeding (whether criminal or civil) does not lie against a person in relation to anything done, or omitted to be done, in good faith by the person if:
(a) the person does the thing, or omits to do the thing, for the purpose of complying with a direction under this Act given by APRA to an RSE licensee, or a connected entity of an RSE licensee; and
(b) it is reasonable for the person to do the thing, or to omit to do the thing, in order to achieve that purpose; and
(c) the person is any of the following:
(i) an officer of the RSE licensee, or of the connected entity of the RSE licensee;
(ii) an employee or agent of the RSE licensee, or of the connected entity of the RSE licensee.
(2) In subsection (1):
employee :
(a) of an RSE licensee, includes a person engaged to provide advice or services to the RSE licensee; or
(b) of a connected entity of an RSE licensee, includes a person engaged to provide advice or services to the connected entity.
officer has the meaning given by section 9 of the Corporations Act 2001.
131FD Protection from liability - provisions do not limit each other
The following provisions do not limit the operation of each other:
(a) section 336B;
(b) section 131FB;
(c) section 131FC;
(d) section 58 of the Australian Prudential Regulation Authority Act 1998.
131FE Informing the Treasurer about issue and revocation of directions
(1) If the Treasurer requests APRA to provide information about:
(a) any directions given under this Actto a particular entity; or
(b) any directions given under this Act, during a specified period, to any entity of a specified kind;
APRA must comply with the request.
(2) APRA may provide any information that it considers appropriate to the Treasurer about:
(a) any directions given under this Act at any time; or
(b) any revocations of any such directions.
(3) If APRA provides the Treasurer with information about a direction and then later revokes the direction, APRA must notify the Treasurer of the revocation of the direction as soon as practicable after the revocation. Failure to notify the Treasurer does not affect the validity of the revocation.