Australia: ASIC enforces section 29QB disclosure obligations on superannuation funds

Last week, ASIC announced that it had intervened over potential breaches of section 29QB of the Superannuation Industry (Supervision) Act 1993 (Cth). The section requires superannuation funds to disclose Transparency Information on their websites and keep it up to date at all times. Disclosure obligations on superannuation entities in relation to their websites appear to have tripped up 21 superannuation trustees.

Trustees should review their internal procedures to ensure they are complying with section 29QB. They should also ensure they are ready for the balance of disclosure requirements for which transitional relief will end in 2019. These relate to requirements for employer-sponsored sub-plan information, product dashboard requirements for choice products and portfolio holdings disclosure requirements.

THE OBLIGATIONS

These obligations commenced on 1 July 2013 as part of the government's "Stronger Super" reforms. In short, they require superannuation funds to have a website and provide up-to-date information on it about executive remuneration and the super fund's governance.

Significantly, non-compliance with the requirements of section 29QB is a strict liability offence attracting a 50 penalty unit fine ($10,500 at present, with a penalty unit having increased to $210 effective 1 July 2017). While this amount is relatively small, trustees should note that in some cases a fine may need to be paid by the trustee personally without recourse to the assets of the fund.

THE DEFICIENCIES

ASIC's observed non-compliance with section 29QB (and regulations 2.37 and 2.38 Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations)) related to non-disclosure and incorrect disclosure of information.

The 21 instances of non-compliance related to funds having:

  • no website (10 funds);
  • no transparency information on their websites (four funds);
  • no remuneration information on their websites (five funds); and
  • incorrect remuneration disclosure on their websites (two funds).

LESSONS LEARNED

There are significant practical lessons for trustees to take away from ASIC's section 29QB interventions:

  1. Exact compliance is necessary. It is impermissible to disclose bands or ranges of remuneration figures, as two trustees had done.
  2. ASIC relief for a breach operates prospectively. ASIC will not forgive past breaches of section 29QB by granting relief, as two trustees had sought.
  3. Funds must continue to comply with section 29QB requirements until the fund is formally wound up. Funds which are merging should retain the required information on the fund website or obtain reporting relief.

DOES SECTION 29QB REQUIRE 'SOMETHING MORE'?

While ASIC's media release about its intervention is relatively uncontroversial, there does appear to have been some 'creep' in ASIC's interpretation of section 29QB. In particular, ASIC's Deputy Chairman's view that:

"ASIC's expectation is that super fund websites should be easily found by searching on the fund's name using an Internet search engine and that the website homepage should prominently point to the Transparency Information".

suggests that something more may be required than what is expressed in section 29QB or regulations 2.37 and 2.38. Nor is such an obligation contemplated in ASIC Regulatory Guide 252 Keeping superannuation websites up to date. However, ASIC has expressed a similar view in ASIC Information Sheet 170 regarding MySuper product dashboard requirements, suggesting they be displayed in a "prominent position" and that their location be "readily accessible".

Although regulation 7.9.75BA of the Corporations Regulations 2001 (Cth) permit fund information to be provided via a website and require, where it is provided via a website, that it is "readily accessible from the website", ASIC's position in relation to section 29QB has no clear legislative basis and funds may struggle to understand just how "prominently" Transparency Information must be displayed. Moreover, trustees have little control over the positioning of their website in internet search results.

While such statements do not have the force of law, they may reflect ASIC's interpretation of the law. Accordingly, superannuation trustees should err on the side of caution by drawing more attention to the Transparency Information on their websites rather than less.

CONTACT

If you have any queries about the content of this article, please contact a member of our team.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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