Proposed refinements to choice product dashboard & portfolio holdings disclosure for super funds

4 February 2016

In welcome news for Australian superannuation funds and their investment managers, the Australian Government has released exposure draft legislation to refine the frameworks for 'choice' product dashboards and portfolio holdings disclosure for superannuation funds.

The release is a response to concerns about compliance costs for the superannuation industry and the complexity of the current disclosure regime which led to a deferral of the commencement date.

The requirements are currently proposed to come into effect on 1 July 2016 and the trustee of a registrable superannuation entity (RSE) (other than a pooled superannuation trust) will be required to:

  • make a product dashboard providing certain information about "choice" products publicly available on its website (these requirements currently already apply to MySuper products); and 
  •  report details of portfolio holdings twice annually (at each reporting day of 30 June and 31 December) on its website, within 90 days of the reporting day.

The draft legislation proposes to:

  • limit choice product dashboard to a superannuation fund's top ten investment options, as measured by funds under management, instead of all investment options;
  • limit disclosure of a superannuation fund's portfolio holdings to assets that the fund, or an associated entity, has directly invested in, instead of requiring disclosure for all fund assets on a 'look-through' basis with respect to multiple levels of investment. The obligations to include information about financial products or other property that non-associated entities have directly invested are proposed to be repealed;
  • allow a superannuation fund to choose not to disclose up to 5% of the assets attributable to each investment option, which provides flexibility to exclude from disclosure a limited number of investments considered to be commercially sensitive; and
  • repeal the reporting obligations on parties to contracts and arrangements that acquire a financial product using the assets, or assets derived from assets, of an RSE.

The easing of a trustee's portfolio holdings obligations so that they are limited to the first investment by the fund in a non-associated entity or by associated entities may facilitate super fund investment in certain funds where public disclosure of underlying investments and values is commercially sensitive, for example, hedge fund investments.  
 
The proposal also means that parties to contracts and arrangements in relation to the acquisition of a financial product using assets derived from a super fund (which may include investment managers in some circumstances) would not have a legal obligation to inform investee entities that the assets invested derived from a super fund or to report information to super funds for portfolio holdings disclosure purposes.

As some superannuation funds may also have sought to oblige investment managers, under their investment management agreements, to provide reporting to the fund to assist with the portfolio holdings disclosure obligations, the proposal may also ease compliance obligations for affected investment managers.

The Government is seeking to introduce legislation in early 2016 with effect from 1 July 2016. More information can be found here.

Henry Davis York is part of an industry working group which has provided feedback on the consultation for the draft legislation. 

Nikki Bentley

I understand the financial services industry and thrive on helping our clients in this industry succeed.

Nikki Bentley Partner

Nikki is the Group Leader of Henry Davis York's Corporate Group, which includes the legal teams for Corporate / Mergers & Acquisitions; Investments & Financial Services and Tax.

Nikki is a leading investment funds advisor specialising in financial services and corporate law.  She specialises in business establishment and structuring, fund establishment, funds merger and acquisition, product disclosure and distribution. Nikki leads HDY's corporate group which combines expertise from the Financial Services, M&A and Tax areas.

Nikki provides advice to leading Australian and global fund managers on a full range of corporate, commercial and regulatory issues facing their businesses. She has considerable experience in assisting clients with fund establishment (onshore and offshore), disclosure and distribution. Nikki regularly advises clients on establishing, buying, selling and restructuring their businesses. She also regularly assists clients responding to regulatory enquiries and investigations.

With more than 15 years funds management experience in private practice, government and as an in-house lawyer, Nikki's practice spans the range of funds management products, with particular expertise in hedge funds, property funds and equities.

Nikki is regularly involved in industry and government discussions on regulatory reforms impacting the Australian funds management industry. Nikki is a passionate advocate for the development of a new corporate collective investment vehicle because of the opportunities it could provide to grow the funds management industry. She is the Honorary Legal Counsel and Chair of the Regulatory Committee for the Australian branch of the Alternative Investment Management Association (AIMA) and is a regular participant on the Financial Services Council (FSC) working groups.

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Jon Ireland

I constantly strive for technical excellence and commercial outcomes that add real value for my clients.

Jon Ireland Partner

Jon has extensive experience in corporate and financial services law, specialising in complex transactions, funds management and investment distribution. Jon also advises on regulatory issues relating to the use of technology in financial services.

Jon provides advice to leading Australian and international financial services clients on the full range of corporate, commercial and regulatory issues facing these businesses. He has considerable experience advising them on establishing, buying into, selling and restructuring their businesses.

Jon regularly advises on funds management issues including fund structuring, disclosure, investment management and outsourcing arrangements. He has particular expertise in the area of investment distribution and has advised on key projects for platform operators and advice providers.

Recently, Jon has advised on the establishment of a fully digital investment platform, the negotiation of a material outsourcing arrangement for a global investment bank and a scheme modernisation project for a leading Australian fund manager. Jon has also recently advised on the establishment of the Australian operations of a global diversified financial services business, including regulatory and corporate issues related to its expansion.

Jon's clients value his advice on recent law reforms, including around product disclosure statements and the digital provision of financial services. Jon is consulting to the Committee for Sydney and is a regular participant on Financial Services Council working groups.

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Vinod Kumar

I aim to exceed expectations with commercial, innovative and engaging legal advice.

Vinod Kumar Senior Associate

Vinod advises fund managers and other financial institutions on corporate, commercial and regulatory issues facing their businesses. He specialises in funds management and general corporate law.

Vinod specialises in regulated and unregulated corporate transactions, funds management and financial services regulation. Vinod also provides general corporate advice on matters such as Corporations Act, ASX and regulatory compliance, corporate governance and disclosure.

Vinod's experience includes:

  • advising on a range of listed and unlisted funds, inbound and outbound investment and complex investment products including expertise in superannuation funds
  • foreign financial institutions establishing businesses in Australia
  • assisting clients to establish wholesale and retail funds (managed investment schemes and trusts). Assisting clients to apply for, vary, and administer Australian Financial Services Licences and Australian Credit Licences
  • advising trustees and responsible entities on governance, financial and operational requirements. Developing, implementing and reviewing compliance and risk management policies and procedures
  • advising on trust restructures and schemes, mergers and acquisitions of funds, fund investments and divestments
  • advising on financial services regulations including the Corporations Act 2001 (Cth), Superannuation Industry (Supervision) Act 1993 (Cth) and related regulations
  • launching new financial products including preparing information memoranda, product disclosure statements and advising on disclosure obligations generally, including under the ASX Listing Rules.

 

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Matthew Farnsworth

It's rewarding to partner with clients to find solutions that add value and help them succeed.

Matthew Farnsworth Special Counsel

Matthew has extensive experience in funds management and financial services law. He advises leading Australian and international financial services clients across a wide range of transactional and regulatory matters.

Matthew advises leading Australian and international financial services clients on transactional and regulatory matters.

Clients look to Matthew to assist them to establish, offer and operate retail and wholesale investment funds. He advises on Australian financial services licensing, fund governance, offer documents and fund restructures, including managed investment schemes and other collective investment vehicles (CIVs).

He also advises on outsourcing arrangements, compliance issues and on ongoing regulatory developments in the financial services sector.

Matthew is experienced in the full range of asset classes and has particular experience in the property funds sector, including fund establishment, capital raising and restructures.

He is also experienced in a wide range of transactions in the financial services sector, joint ventures and funds M&A.

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