New regulations have been made to amend the Corporations
Regulations 2001 to further clarify the provisions relating to the
form and content of the First Home Saver Account (FHSA) product
disclosure statement (PDS). They also provide that the right to
return a FHSA product during the cooling-off period and certain
other defined situations is restricted to reflect the payment
restrictions applying to FHSAs. Other amendments facilitate the
transfer of funds from an inactive FHSA to a default superannuation
fund, and clarify the circumstances under which the FHSA PDS must
be the first document given or sent to a client.
The First Home Saver Accounts Act 2008 and related legislation
to implement and regulate First Home Saver Accounts introduced by
the Australian Government to assist first home buyers to save for
their first home, received Royal Assent on 25 June 2008. The
legislation came into force from 26 June 2008. However, to enable
providers to develop products and systems, it will not be possible
for a customer to open an FHSA until 1 October 2008. An FHSA is a
financial product for the purposes of the Corporations Act 2001
The Government initiative is aimed at enabling super funds and
banks to offer a superannuation style investment account that helps
maximize savings through tax breaks and Government
Corporations Amendment Regulations 2008 (No. 4)
On 17 July 2008, the Corporations Amendments Regulations 2008
(No. 4) (First FHSA Amendment Regulations No.4)
were made, prescribing in detail among other things the form and
content of the PDS for FHSAs.
After the First FHSA Amendment Regulations were made, further
analysis and submissions received from stakeholders revealed that
there are a small number of technical problems and potentially
misleading statements that need to be addressed in order to ensure
that the policy intent of the Government with respect to the form
and content of the FHSA PDS is fully achieved.
Corporations Amendment Regulations 2008 (No. 5)
The new Corporations Amendments Regulations 2008 (No. 5)
(Second FHSA Amendment Regulations) deal with the
identified problems and potentially misleading statements. Issues
covered by them include:
The right to return the FHSA product in certain situations is
restricted to reflect the payment restrictions applying to
Funds from an inactive FHSA account can be transferred to a
default superannuation fund without the need for an application
form to be completed
The requirement for the FHSA PDS to be the first document given
or sent to the client only applies to those documents directly
related to the FHSA
Certain statements in the prescribed text are amended to
provide for clarity and consistency
The fee disclosure provisions are amended to clearly define
what indirect costs and management costs are and how they are to be
The Second FHSA Amendment Regulations and the relevant
Explanatory Statement can be accessed at
The Explanatory Statement for the Second FHSA Amendment
Regulations contained two prototype examples of FHSA PDSs. These
have been amended to account for the changes, and also to correct a
number of inconsistencies and errors in the original versions.
How do the new amendments affect you?
If you are an FHSA provider that is making FHSA products
available by 1 October 2008, you will need to take into
consideration the new requirements set out in the Second Amendment
Regulations to make further amendments to the PDS of your FHSA and
your processes for FHSA. Deacons can assist in making the
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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