(a) ASIC Class Order 09/210 Intra-fund superannuation advice and Regulatory Guide 200 Advice to superannuation fund members
On 7 July 2009, ASIC released Class Order 09/210 which provides relief from Corporations Act 2001 (Cth) (Corporations Act) section 945A to trustees of superannuation funds in certain circumstances. Also, on 9 July 2009, ASIC released13 a new Regulatory Guide 200 Advice to super fund members14 which aims to ‘clarify existing law and increase super fund members’ access to advice about their existing interest in a super fund’. Below we provide a brief summary of these new developments.
Giving personal advice
A superannuation fund trustee with an AFS licence which authorises the provision of personal advice can give personal advice to a superannuation fund member about (among other things) the member’s existing interest in the fund. A Statement of Advice must generally be provided. In giving personal advice about the member’s existing interest in the superannuation fund, a superannuation fund trustee must either:
- comply with the requirement to give ‘suitable’ advice. The requirement to give suitable advice is ‘scalable’; the level of inquiry and analysis required to ensure that advice is suitable can reflect the complexity of the advice being provided. (See existing section 945A of the Corporations Act regarding the requirement to obtain information about a client’s personal circumstances before giving advice and Regulatory Guide 175 Licensing: Financial product advisers—Conduct and disclosure)15, or
- rely on Class Order 09/210 Intra-fund superannuation advice16 if eligible. This new Class Order provides relief from section 945A to the trustee of a superannuation fund (other than SMSFs) and their authorised representatives for the provision of personal advice to a member of that fund where:
- the trustee holds an AFS licence which authorises the provision of personal advice in relation to superannuation
- the advice relates only to the member’s existing interest in the superannuation fund
- the advice does not relate to:
- an investment strategy which involves an underlying financial product requiring disclosure under section 1012IA
- an election by the member to receive a pension from their interest in the growth phase, or
- the deemed issue of a new interest in the fund arising from a change from one sub-plan to another within the fund where the member has a choice or election in relation to the change.
In order to qualify for the relief, the adviser must inform the member of the following:
- the advice is limited to the member’s interest in the fund (this advice must be provided before or at the same time as the advice is provided)
- the advice is limited to the member’s interest in the fund in reliance on Class Order 09/210 (this advice must be provided in writing when or as soon as practicable after the advice is provided), and
- any increase in fees, costs, charges, insurance premiums or any remuneration or commission paid in relation to the member’s interest or insurance (this advice must be provided in writing when or as soon as practicable after the advice is provided).
Giving general advice and factual information
A superannuation fund trustee with an AFS licence which authorises the provision of general advice can give general advice to a member of the superannuation fund provided that the trustee gives the required warning17 to the member. General advice can be provided even where the provider of the advice holds information about the personal circumstances of the member. A simpler warning may be provided when providing oral advice. See Class Order 05/1195 Simplified warning for oral general advice.18 There is a licensing exemption for product issuers, including superannuation fund trustees, giving general advice about the products they issue.
A trustee of a superannuation fund does not need an AFS licence in order to give factual information to members of the fund. See Regulatory Guide 36 Licensing: Financial product advice and dealing.19
Different ways of delivering factual information and advice
ASIC allows superannuation fund trustees to determine how to provide factual information and advice, stating that the ‘Corporations Act is neutral about technology’.
The Appendix to the Regulatory Guide provides examples of the provision of factual information and financial product advice to members. The examples include practical tips on call centre conversations, Statements of Advice, emails and personal advice.
(b) Temporary residents
ASIC registered the Class Order20, [CO 09/437]: Departed former temporary residents superannuation—Disclosure relief, on 10 June 2009. According to the Explanatory Statement, the Class Order provides ‘fund trustees with relief from the requirement to notify and give exit statements to departed former temporary residents in the circumstances of the Unclaimed Moneys Act on conditions that reduce the potential for adverse impact on those persons ultimately being reunited with their benefits’.
The class order provides that a trustee of a regulated superannuation fund that pays an amount to the Commissioner of Taxation under the Superannuation (Unclaimed Money and Lost Members) Act 1999 (Cth) does not have to notify the member in relation to the payment of unclaimed moneys under section 1017B of the Corporations Act or provide the member with an exit statement under section 1017D of the Corporations Act so long as any Product Disclosure Statement, Supplementary Product Disclosure Statement or other relevant documentation prepared after the commencement of the Class Order includes the following:
- a statement that the trustee relies on the relief under Class Order 09/437, and
- the prescribed information about unclaimed moneys.
The above information must also be prominently disclosed on the trustee’s website. If so requested, the information must also be provided directly to the member (along with other documentation reasonably requested) as soon as possible after the request and, in any event, within one month.
The relief is said to respond to ‘industry concerns that a fund trustee will generally not be aware which of its members have been temporary residents until advised by the [Tax Office] and will generally not have overseas addresses for a temporary resident member’.