Legislation
Super funds are primarily regulated under the Superannuation Industry (Supervision) Act 1993 and the Corporations Act 2001. Compulsory employer contributions are regulated via the Superannuation Guarantee (Administration) Act 1992.
Superannuation Industry (Supervision) Act 1993 (SIS Act)
The SIS Act sets all the rules that a complying super fund must obey (adherence to these rules is called compliance).
The SIS Act also:
- regulates the operation of super funds; and
- sets penalties for trustees when the rules of operation are not met.
The rules under the SIS Act include requirements relating to the trustee, investments, payments, fund accounts and administration, enquiries and complaints.
In April 2004 the SIS Act and Regulations were amended to require all trustees to apply to become a Registrable Superannuation Entity Licensee (RSE Licensee). In addition each super fund operated by a trustee was also required to be registered.
The licensing regime requires trustees of super funds to demonstrate that they have adequate resources (human, technology and financial), risk management systems and appropriate skills and expertise to manage the fund.
The Corporations Act 2001
The Corporations Act 2001 was amended in September 2001 by the Financial Services Reform Act 2001 and (subsequently) related legislation (FSR) to introduce a regulatory regime covering a very broad area of finance services with the aim of standardising regulation of the financial services industry. Under FSR, in order to operate certain super funds and provide other financial services (e.g. financial advice), a trustee must have an Australian Financial Services Licence (AFSL) authorising the provision of these services.
With regard to super, FSR:
- requires licensing of most providers of financial products and services (financial services licensees);
- oversees the training of agents or representatives of financial services licensees;
- sets out the requirements regarding what information must be provided about any financial product offered to members and (if applicable) prospective members; and
- sets out the requirements governing the conduct of financial services licensees in the provision of products and services.
Regulatory bodies
Three main regulatory bodies monitor super funds and/or super trustees to ensure they comply with relevant legislation:
The Australian Prudential Regulation Authority (APRA) is responsible (amongst other things) for ensuring that super funds and trustees behave in a prudent manner in accordance with the SIS Act. APRA also reviews a fund's annual accounts to assess their compliance with the SIS Act.
The Australian Securities and Investments Commission (ASIC) is responsible (amongst other things) for ensuring that super trustees comply with their obligations regarding the provision of information to fund members (or prospective members) and a wide range of licensing and conduct obligations applicable to super trustees that hold an Australian Financial Services License. ASIC is also generally responsible for consumer protection in the financial services area (including super) and corporate regulation (i.e. companies). It also monitors compliance with the Corporations Act 2001.
The Australian Taxation Office (ATO) is responsible (amongst other things) for ensuring that self-managed super funds adhere to prudential requirements applicable to such funds under the SIS Act. It is also generally responsible for making sure that the right amount of tax is applied to the super savings of all Australians.
Other Government bodies relevant to the governance of superannuation include:
The Superannuation Complaints Tribunal (SCT) is an independent tribunal operated under the Superannuation (Resolution of Complaints) Act 1993. This Act provides the formal process for the resolution of superannuation related complaints (subject to some exceptions). The SCT will try to resolve any complaints between a member and the super fund by negotiation or conciliation but can make binding determinations (subject to limited appeal to the courts). The SCT only deals with complaints when no satisfactory resolution has been reached through a fund’s internal complaints mechanism.
