The Treasury Laws Amendment (Your Future, Your Super) Act 2021 commenced on 23 June 2021.
It amends the Superannuation Industry (Supervision) Act 1993 (Cth) from 1 July 2021 to:
- require each trustee of a registrable superannuation entity and each trustee of a SMSF to perform the trustee’s duties and exercise the trustee’s powers in the best financial interests of the beneficiaries;
- require each director of the corporate trustee of a registrable superannuation entity to perform the director’s duties and exercise the director’s powers in the best financial interests of the beneficiaries;
- reverse the evidential burden of proof for the best financial interests duty so that the onus is on the trustee of a registrable superannuation entity; and
- allow contraventions of record-keeping obligations specified in regulations to be subject to a strict liability offence to provide regulators with an additional option to respond to compliance issues relating to record-keeping requirements.
“Best financial interests” is explained in the explanatory memorandum as follows:
The purpose of this amendment is to clarify that the financial interests (and not non-financial interests) of beneficiaries must be the determinative factor for trustees to comply with their obligations. In addition to the retirement benefits that superannuation provides members, the financial interests of members may include insured benefits (including death benefits or total and permanent disability coverage) provided in accordance with a properly formulated insurance strategy and other legal, regulatory and professional obligations. Subject to the trustees complying with the sole purpose test, this does not preclude trustees undertaking actions that also yield non-financial benefits to the beneficiaries, but the action cannot compromise the best financial interests of the beneficiaries. How any action will yield financial benefits to the beneficiaries of the superannuation entity must be the determinative consideration for any trustee.
New condition on registrable superannuation entity licences
Separately the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth) amends section 29E of the SIS Act from 1 July 2021 to impose a new condition on registrable superannuation entity licences held by a body corporate trustee. The new licence condition prohibits these trustees from having a duty to act in the interests of another person, subject to exceptions that enable trustees to carry out their ordinary functions as a trustee of a registrable superannuation entity.
ASIC extends licensing relief to all trustees of registrable superannuation entities
ASIC has announced it has extended existing licensing relief for public offer trustees to include all registrable superannuation entities to ensure that non-public offer trustees are regulated consistently with public offer trustees under the Corporations Act 2001.
ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 confirms that a dealing authorisation under an Australian financial services (AFS) licence is not required by public offer trustees in order to deal in a financial product (other than an interest in the fund) in the ordinary course of operating the superannuation fund. ASIC Corporations (Amendment) Instrument 2021/550 has extended the exemption to non-public offer trustees, having regard to law reform that requires these trustees to hold an Australian financial services (AFS) licence.
From 1 July 2021, all registrable superannuation trustees will be required to hold an AFS licence with authorisations to deal in superannuation interests and to provide a superannuation trustee service.
The relief applies to all superannuation trustees for a period of 18 months, ending 31 December 2022.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.