OPINION | On June 1, 2017, the Australian Securities and Investments Commission (ASIC) announced it had further delayed the start dates for the final two components of the Stronger Super reforms.
Superannuation funds now have an additional two years to comply with the new product dashboard requirements for Choice offerings and expanded portfolio disclosure rules. The start dates for these last pieces of the Stronger Super reforms have been moved to July 1, 2019, and December 31, 2019, respectively.
ASIC is also allowing registrable superannuation entities’ licensees to continue to provide their latest product dashboards via a website address in their periodic statements, rather than requiring them to provide hard copies to members.
In some corners, the deferrals will be a welcome reprieve from the consistently changing regulatory landscape, as many are still grappling with the implementation of the fees and cost disclosures in ASIC’s Regulatory Guide 97. Others may be feeling the effects of long-term reform fatigue as the period between the initial Stronger Super consultation in early 2011 and the final ‘go live’ date grows to just shy of a decade.
Over the next two years, the updates to legislation and regulations will provide additional clarity, but due to the complexities and sophistication of superannuation fund investments, it is unlikely that they will be able to address every variable or data point that can occur within a product.
In many cases, it will be superannuation funds and their service providers, such as administrators and custodians, that will be in the best position to determine what is the most appropriate, pragmatic and meaningful level of disclosure to their members. This is especially the case with portfolio holdings, where the right balance needs to be struck between providing a long list of individual holdings, potentially thousands of lines long, and a more contextual disclosure
that is meaningful to the desired audience.
The Australian Custodial Services Association (ACSA) has worked closely with regulators throughout the Stronger Super implementation and the collaborative experience with our relevant industry subject matter experts has significantly
aided the formulation of workable solutions to disclosure requirements.
The most optimal implementation of new regulatory disclosure requirements occurs when ACSA is able to apply the spirit of the law to a given situation or investment type. In such cases, the solution is more pragmatic and closely aligned to the
original aims of the regulators.
Portfolio holdings disclosure can be quite a sensitive issue for many superannuation funds, as the prospect of either not complying with regulations or, alternatively, providing more information to the market than their competitors, is an unwelcome one.
In working towards an industry approach to minimising this concern, ACSA is continuing our earlier work and collaborating with those super funds that have already begun disclosing their portfolio holdings so a baseline disclosure view can be formulated. This view needs to be detailed enough to provide adequate transparency but grouped and presented in a way that is meaningful for members.
The additional time ASIC has provided is more than adequate to complete this if industry participants take the initiative
to work through and solve the challenges.
This will also greatly increase the likelihood that the Stronger Super reforms result in outcomes that benefit members, whilst at the same time minimising the ongoing compliance cost to the industry.
Darryll Rogers is the deputy chair of the Australian Custodial Services Association’s regulatory compliance working group and was previously the chair of the ACSA Stronger Super taskforce. He is a senior executive at NAB Asset Servicing. This article first appeared in the July 2017 print edition of Investment Magazine. To subscribe and have the magazine delivered CLICK HERE. To sign-up for our free regular email newsletters CLICK HERE.