The changes follow an ASIC review of the operation of exemptions available to charities from certain managed investment, debenture, fundraising and licensing provisions of the Corporations Act. The changes are aimed at ensuring the policy is consistent with our objectives of confident and informed investors and fair and efficient markets.

The review had identified difficulties in liquidity management by fundraisers and the effectiveness of their disclosure.

Following extensive consultation under Consultation Paper 207 Charitable investment fundraisers (CP 207) and further consultation with industry stakeholders on our proposals, ASIC has made a number of updates, including:

• from 1 January 2017, charitable investment fundraisers will not be permitted to issue at-call or investments with a term of less than 31 days to retail investors
• from 1 January 2018, charitable investment fundraisers that wish to issue investments to retail investors who are not associated with the charity will no longer be exempted from the requirement to hold for Australian financial services licence from ASIC. Further, additional restrictions apply that are designed to avoid the investments being used for transactional facilities.

The changes have been made in consultation with the Australian Prudential Regulation Authority (APRA) to ensure there are no inappropriate inconsistencies in our policy position. ASIC notes that some charitable investment fundraisers are Religious Charitable Development Funds which rely on APRA’s exemption from the Banking Act (which is also under review by APRA).

In addition, we have applied disclosure, lodgement, breach reporting and financial reporting requirements although these requirements are less stringent than the equivalent provisions in the Corporations Act that apply to regulated entities.

The changes announced today are effected by repealing existing class order CO 02/184 Charitable investment schemes- fundraising and replacing it with ASIC Corporations (Charitable Investment Fundraising) Instrument 2016/813 and issuing a new version of Regulatory Guide 87 Charitable investment fundraising and school enrolment deposits.

The existing class order CO 02/151 School enrolment deposits has also been repealed and replaced with ASIC Corporations (School Enrolment Deposits) Instrument 2016/812 without substantive amendment. This will continue to permit schools accepting enrolment deposits to do so without the requirement to comply with the relevant provisions of the Corporations Act.

ASIC Commissioner Greg Tanzer said, ‘We are satisfied that our policy strikes the right balance between exempting charitable investment fundraisers from applicable legal provisions where investors are motivated to support the charitable purposes while maintaining appropriate protections for investors.’

The post ASIC updates regulatory framework for charitable investment fundraisers appeared first on AdviserVoice.

The report highlights ASIC’s key areas of focus for the organisation and outcomes supporting those areas, including:

• poor organisational culture in the financial services industry
• retail margin foreign exchange trading
• illegal phoenix activity, and
• increasing volumes of electronic evidence and the associated technology.

Over the six-month period, ASIC has:

• secured $149 million in compensation and remediation for consumers and investors
• removed 27 individuals from financial services
• laid 42 criminal charges
• charged six persons in criminal proceedings
• issued 20 infringement notices
• commenced 105 investigations, and
• completed 86 investigations.

The report also contains detail on ASIC’s areas of focus for the rest of 2016. The integrity of financial market benchmarks remain a high enforcement priority, as do disclosure obligations and market abuse. ASIC will continue to address these issues through strong enforcement action. ASIC’s Wealth Management Project, which seeks to lift the standards of major financial advice providers, and ASIC’s court proceedings aimed at winding up land banking schemes are also high priorities for the foreseeable future.

For the first time, the enforcement report also contains infographics and statistics about how an ASIC investigation operates. The report uses examples of recent ASIC investigations to communicate the processes and procedures that ASIC uses to achieve its enforcement outcomes.

ASIC Commissioner Greg Tanzer said, ‘ASIC does everything in its power to detect and take action against those who break the law, to ensure consumers can have trust and confidence in our financial markets and financial services industry. This report highlights our strong recent enforcement record and ongoing areas of focus.’

Download the report

The post ASIC’s latest enforcement report outlines key outcomes and areas of focus for the future appeared first on AdviserVoice.

‘Super is a complex area, not just for individuals but for employers as well – and we know decisions that employers make can have a big impact on employees and their retirement savings,’ ASIC Commissioner Greg Tanzer said.

‘The new information on ASIC’s MoneySmart website will assist employers to make some of these important decisions.’

The updated information encourages employers to consider a range of factors when deciding about a default super fund for employees, including fees, investment options offered, fund performance and insurance.

Commissioner Tanzer said ASIC also encourages employers to be very wary of trustees offering them inducements to pick their funds.

‘Employers should not choose a default fund on the basis of an inducement. I strongly encourage employers who are concerned they may have been offered an inducement that is illegal to contact ASIC,’ Commissioner Tanzer said.

The updates follow a review of some retail and industry super trustees to assess their compliance with s68A of the Superannuation Industry (Supervision) Act 1993.

ASIC will continue to monitor the area of employer inducements and may consider undertaking shadow shopping exercises to gain a better understanding of the employer experience when dealing with superannuation trustees and their associated businesses.

‘Where we find evidence illegal inducements have been offered, ASIC will not hesitate to take action,’ Commissioner Tanzer said.

The post ASIC guidance to employers about super appeared first on AdviserVoice.

The reminder comes after ASIC cancelled more than 95,000 business names in the first half of 2015 after business name holders failed to pay their renewal notice.

ASIC Commissioner Greg Tanzer said, ‘Renewing is a simple process and we encourage business owners to go online where they will find guidance on business name renewal fees, what the renewal period options are, how you will be notified of an upcoming renewal as well as an outline of what happens after you have renewed.’

A registered business name can be renewed with ASIC for either one or three years.

Since ASIC took over the Business Names Register in 2012, Australian businesses have saved $120.7 million in reduced fees to register and renew a business name.

Mr Tanzer added, ‘ASIC’s role includes ensuring that small businesses understand what is expected of them and providing them with tools to make that understanding easier to obtain.’

Business name holders can check the next renewal date by searching their business name on ASIC Connect Search.

The post Renew and maintain your business name appeared first on AdviserVoice.

The submission sets out:

• ASIC’s role in relation to the regulation of forestry managed investment schemes, and
• actions ASIC has taken to address issues arising in this sector as a result of the collapse of a number of responsible entities of forestry schemes.

It also provides ASIC’s views on potential areas for reform with reference to proposals in a July 2012 Corporations and Markets Advisory Committee (CAMAC) report, including:

• the potential for a prospective ban of agribusiness managed investment schemes (MISs)
• the adoption of particular recommendations made by CAMAC
• governance and risk management arrangements that apply to managed investment schemes
• a more flexible regulatory toolkit to address weaknesses in the Australian financial services (AFS) licensing regime, and
• the potential for the introduction of a statutory compensation scheme.

ASIC Commissioner Greg Tanzer said, ‘We see some merit in considering potential reforms of this sector, however, any such reforms should be considered within the broader work that has been done in developing potential refinements to the regime as a whole.

‘As a result, we have identified some potential areas for reform that relate to the specific business model of common enterprise schemes, and forestry schemes in particular, as well as potential areas for reform across the broader managed investment scheme sector.’

Download ASIC’s submission to the 2014 Senate inquiry into forestry managed investment schemes

The post ASIC releases its submission to the 2014 Senate inquiry into forestry managed investment schemes appeared first on AdviserVoice.

Last Friday ASIC has published Report 384 Regulating complex products (REP 384) about its review. REP 384:

• outlines the risks posed by complex products to retail investors
• sets out ASIC’s recent and current work on complex products, including considering the whole of the product lifecycle – development, distribution, sale, and post-sale, and
• identifies opportunities for further work, including working with industry, where appropriate.

‘The low yield environment and non-trending equity market over recent years has contributed to the development of new products that have the potential to introduce new types of complexity,’ ASIC Commissioner Greg Tanzer said.

‘This development can have an impact on the realisation of ASIC’s strategic priorities of promoting confident and informed investors and financial consumers, and fair and efficient markets.

‘Complex products, due to their nature, can be difficult for investors to understand. This can lead to them being mis-sold, particularly when investors are searching for yield.

‘We want those institutions selling these complex financial products to consider the risks outlined in this report in the context of their own business. It’s not a sustainable business model if your customers are losing money.’

Feedback on the report closed 31 March 2014.

The post ASIC releases report on regulating complex products appeared first on AdviserVoice.

Financial advisers will continue to be licensed (or authorised under an Australian financial services licensee) by ASIC and adviser obligations under the Corporations Act 2001 (Corporations Act) remain unchanged.

Until 31 December 2015, AFS licensees and their authorised representatives who provide a tax (financial) service can either:

• notify the TPB to become registered as a tax (financial) adviser, or
• use a relevant disclaimer when they provide tax (financial) advice services for a fee or other reward.

This option is the first phase of the progressive introduction of registration of tax (financial) advisers that will continue over the next three years.

Commissioner Greg Tanzer said, ‘ASIC and the TPB have been working cooperatively for many months to ensure the smooth transition of the new regulatory regime.

‘This has included sharing information from ASIC registers with the TPB to cut red tape and streamline the tax (financial) adviser registration process.’

ASIC and the TPB will continue to work together as the regime is implemented.

More information can be found on the Financial advisers providing tax advice page of the ASIC website and TPB website.

The post New regulation of financial advisers providing tax advice appeared first on AdviserVoice.

ASIC reviewed a number of MySuper product dashboards from across the superannuation industry, to ensure they provide useful and accessible information to members. This review was based on the product dashboard requirements and measures set out in ASIC Information Sheet 170 MySuper product dashboard requirements for superannuation trustees (INFO 170).

‘Our review suggests that trustees have shown a good level of compliance with the product dashboard requirements for MySuper products,’ Commissioner Greg Tanzer said. ‘Some trustees have chosen to adopt the ASIC ‘mock up’ of the product dashboard. However, there are some areas for improvement to the accessibility and clarity of product dashboards.’

In particular, ASIC expects trustees will:

• show the product dashboard in a prominent position and readily accessible location on the trustee’s website. This requirement is not met if several pages have to be navigated through, or a site ‘searched’, to view the product dashboard, or the product dashboard is otherwise difficult to find. The product dashboard should be able to be seen readily by a user of the website that has no prior knowledge of the concept of the product dashboard.
• not include information within the parameters of the product dashboard that is not required by the product dashboard mandatory provisions. This is distinct from the additional information being outside and proximate to the product dashboard. The inclusion of optional information, such as asset allocation information, within the product dashboard has the potential to compromise the ability of users to compare across multiple (non-uniform) product dashboards. It may also serve to confuse users of the product dashboard.
• address all of the mandatory elements. Some trustees have omitted the past returns and return target-past return comparison from the product dashboard where there is no predecessor product. In this situation, our preferred approach is for the trustee to include all elements with an accompanying explanation to the effect that no past return information is available because the MySuper product has not been in existence for a full financial year and there was no predecessor product.
• address each of the mandatory elements separately. For example, past return percentages should not be shown in the return target-past returns comparison graph.

Trustees may include additional information outside the product dashboard to assist users. Additional information may include, for example, the use of graphs, asset allocation charts, investment risk measures and a glossary of terms. In reviewing MySuper product dashboards, we observed that the additional information provided outside the parameters of the product dashboard, but in close proximity to it, was in most instances helpful to a user in understanding the mandatory elements of the product dashboard. The overall impression formed from the mandatory elements and the optional disclosure around the product dashboard should not be confusing, otherwise the trustee may be engaging in misleading or deceptive conduct.

Trustees are reminded that it is an offence for a trustee to fail to publish a product dashboard at all, or to publish a product dashboard that is out of date, omits required information or otherwise is misleading or deceptive.

Consistent with ASIC’s facilitative compliance approach for super reforms until 1 July 2014, ASIC is adopting a measured approach where inadvertent breaches arise or systems changes are underway, provided industry participants are making reasonable efforts to comply.

The product dashboard regime for Choice products is still subject to Government consultation and was scheduled to commence on 1 July 2014. On 5 May 2014, the government released an announcement which included that the Choice product dashboard provisions will be deferred to 1 July 2015. Our review of product dashboards did not cover Choice products.

The post ASIC reviews MySuper product dashboards appeared first on AdviserVoice.

Andrea Slattery

The SMSF sector has been strongly endorsed by both sides of politics, the regulators and Treasury at the SMSF Professionals’ Association of Australia (SPAA) national conference in Brisbane.

SPAA CEO Andrea Slattery, speaking after the session where the ATO, Treasury and ASIC gave their views on the SMSF sector, said: “The really positive thing to come out of this conference is how all three government bodies believed the sector was performing strongly.

“With the Financial Services Inquiry underway, a review of the taxation system leading to a White Paper and an examination of income streams to look at the payment of superannuation and social security benefits in the pipeline, then it was reassuring for SMSF specialists to hear that endorsement from Treasury and the regulators.

“When combined with the positive comments by the Assistant Treasurer, Arthur Sinodinos, on Wednesday, and the Opposition’s spokesperson on Superannuation, Bernie Ripoll, today, then it becomes clear that our industry, with $543 billion in FUM, is on the right track.”

Slattery said it was encouraging to hear Rob Heferen, Treasury’s Executive Director, Revenue Group, say that it was the view of the Government that SMSFs “were unambiguously a good thing, and that people aiming to be self sufficient in retirement was in tune with its philosophical direction”

Heferen, the first Treasury official to address a SPAA conference, urged the SMSF specialists to get involved with the different inquiries now underway “as they will set the scene for the industry for the years ahead”.

ATO Deputy Commissioner Superannuation, Alison Lendon, told the conference that the ATO was committed to improving the services it provided to SMSF fund managers and trustees.

“With the popularity of SMSFs continuing to grow, we want to work with trustees and their advisors to improve compliance and make sure they are prepared for several regulatory changes that will be rolled out over the next year.

“We have launched two YouTube videos for trustees, that will cover ‘hot topics’ and provide introductory information on areas we think people may need more help to understand,” Lendon said.

ASIC Commissioner Greg Tanzer took the opportunity to reiterate the regulator’s position that “some promoters recommending real estate may be breaching the law.

“A license is required to provide financial product advice even where the underlying investment is not a financial product (real estate) because the investment vehicle – the SMSF – is a financial product, and ASIC will vigorously pursue those promoters who are unlicensed.”

The post Regulators, Treasury say SMSFs ‘performing well’ appeared first on AdviserVoice.

Guidance

The guidance relates to the new product dashboard requirements for MySuper products, and the new fees and costs disclosure requirements for product disclosure statements (PDSs) and periodic statements.

Product dashboard

From 31 December 2013, trustees will be required to publish and keep up to date, a product dashboard for their new MySuper products. MySuper products are the new default products in superannuation, replacing over time existing default funds. The product dashboards will enable consumers to compare their super with other funds and products.

Information Sheet 170 MySuper product dashboard requirements for superannuation trustees (INFO 170) explains what information must be provided for each of the following measures:

• the return target
• the returns for previous financial years
• a comparison between the return target and returns for previous financial years
• the level of investment risk, and
• a statement of fees and other costs.

INFO 170 also contains an example of what the product dashboard may look like, which incorporates some of the feedback from the independent consumer testing conducted by Latitude Insights.

The results of the testing have been released as ASIC Report 378 Consumer testing of the MySuper product dashboard (REP 378).

Recently the Australian Government released a Discussion Paper 2013 Better regulation and governance, enhanced transparency and improved competition in superannuation which looks at, among other things, the choice product dashboard.

ASIC Commissioner Greg Tanzer said: ‘We hope that the dashboard example provided by ASIC will help trustees see the potential of the product dashboard and its benefits to consumers.’

It is an example only to help illustrate the potential of the dashboard: not all of the content requirements are specifically required by the legislation, or by APRA’s Reporting Standard SRS 700.0 Product Dashboard.

In 2014, ASIC plans to publish information from the product dashboards on its MoneySmart website, based on data provided by APRA.

Fees and costs disclosure

The Superannuation Legislation (MySuper Measures) Regulations 2013 changed the existing superannuation and managed investment fee disclosure requirements under the Corporations Regulations 2001. ASIC has issued FAQ guidance to help super trustees with respect to these changes.

Importantly, ASIC guidance emphasises that there should not be double counting of fees.

Consultation

ASIC has also released Consultation Paper 219 Keeping superannuation websites up to date (CP 219), which considers what ‘up to date at all times’ means in the context of s29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act). These requirements relate to executive officer remuneration disclosure and other systemic transparency measures.

ASIC proposes giving trustees a ‘safe harbour’, so that they are taken to comply with the updating obligation in s29QB if they update the fund website within a specified time. That time is generally 14 days.

ASIC is seeking feedback by 3 February 2014.

In relation to s29QB, ASIC has also recently amended its Class Order [CO 13/830] to extend the timeframe for compliance with the requirements of this section until 1 July 2014.

Further, ASIC has issued FAQs in relation to the s29QB disclosure requirements, including providing guidance on the definition of executive officers. This information is available on its superannuation page.

The post ASIC issues further super reforms guidance appeared first on AdviserVoice.