Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1996
THE PARLIAMENT OF THE
COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
RETIREMENT SAVINGS
ACCOUNTS BILL 1996
SUPPLEMENTARY EXPLANATORY
MEMORANDUM
Amendment to be moved on behalf of the
Government
(Circulated by authority of
the Assistant Treasurer, Senator the Hon Rod Kemp)
80620 Cat.
No. 96 5911 0 ISBN 0644 496932
AMENDMENTS TO RETIREMENT SAVINGS ACCOUNTS BILL 1996
GENERAL
OUTLINE OF THE AMENDMENTS
The amendments to the Retirement Savings
Accounts Bill 1996 (RSA Bill) are intended to enhance the effectiveness and
efficiency of the new regime for regulating retirement savings accounts (RSAs)
and to remove doubt over the application of certain provisions in the
Bill.
In particular, the amendments will:
• provide that the
relevant prudential regulator be consulted before the Insurance and
Superannuation Commissioner makes a decision to refuse an application for
approval as an RSA institution or directs an RSA institution not to accept
contributions made to RSAs by specified employers;
• remove the
requirement that certain money is to be held on trust; and
• make
various miscellaneous technical amendments to ensure that the wording of
particular provisions achieves the effect intended.
FINANCIAL IMPACT
STATEMENT
There is no financial impact as a result of these
amendments.
EXPLANATORY NOTES ON THE AMENDMENTS TO THE RETIREMENT
SAVINGS ACCOUNTS BILL 1996
Clause 16 -
Definitions
1. Amendment (1) inserts a definition of AFIC
Codes in clause 16 of the RSA Bill. This is to replace the definition of
Financial Institutions Codes.
Clause 16 -
Definitions
2. Amendment (2) amends the definition of building
society in clause 16 of the RSA Bill to include a reference to the AFIC
Codes.
Clause 16 - Definitions
3. Amendment (3) amends the
definition of credit union in clause 16 of the RSA Bill to include a
reference to the AFIC Codes.
Clause 16 -
Definitions
4. Amendment (4) amends the definition of financial
institution in clause 16 of the RSA Bill to include a reference to the AFIC
Codes.
Clause 16 - Definitions
5. Amendment (5) omits the
definition of Financial Institutions Codes in clause 16 of the RSA
Bill. This is replaced by the definition of AFIC Codes.
Clause
26 - Deciding an application for approval
6. Amendment (6) amends
clause 26 of the RSA Bill by replacing subclause 26(2) with new subclauses
26(2) and 26(2A).
7. The effect of this amendment is to provide that the
prescribed regulatory agency (if any) must be consulted before the Commissioner
can be satisfied that the applicant cannot be relied upon to conduct RSAs in
accordance with the Act and regulations and therefore refuse the application.
8. The requirement to consult with the relevant prudential supervisor
before refusing an application for approval will enable the Commissioner to be
appraised of any potential systemic consequences of refusing an RSA application.
It will also clearly signal to the market that refusal of an application is not
indicative of prudential failings, but only of the institution’s inability
to conduct RSAs in accordance with the RSA Act and regulations.
9. The
Commissioner is both the prudential and functional regulator of life insurance
companies and therefore technically cannot consult with himself. As such, the
Commissioner will only be required to consult before refusing an application for
approval where there is a relevant prescribed regulatory agency, that is, the
Reserve Bank of Australia in the case of banks, and the Australian Financial
Institutions Commission and State Supervisory Authorities in the case of
building societies and credit unions.
Clause 33 - Suspension or
revocation of approval
10. Amendment (7) amends clause 33 of the RSA
Bill in order to clarify the circumstances in which the Commissioner is required
to consult with a prescribed regulatory agency (if any) when suspending or
revoking an RSA institution’s approval.
11. The Commissioner is
both the prudential and functional regulator of life insurance companies and
therefore technically cannot consult with himself. As such, clause 33 is
amended to clarify that the Commissioner will only be required to consult before
suspending or revoking the approval of an RSA institution where there is a
relevant prescribed regulatory agency.
Clause 34 - Consequences of
suspension or revocation
12. Amendment (8) amends the note in
subclause 34(4) of the RSA Bill to remove the reference to some amounts being
held in trust. The amended note will indicate that some amounts that are given
to an RSA provider will not be accepted as a contribution but must be held and
dealt with in the manner prescribed by the regulations.
13. This
amendment is necessary as a result of amendments made to clause
60.
Clause 40 - Interest off-set arrangements etc. not
permitted
14. Amendment (9) inserts a new subclause in clause 40 of
the RSA Bill. This amendment will provide that, where an RSA provider
contravenes the requirement not to enter into any interest off-set or
combination account arrangements where one of the accounts involved is an RSA,
the validity of such an arrangement will not be affected to the extent that it
relates to an account other than an RSA.
15. The effect of this will be,
for example, that if an arrangement is put in place to link a savings account
with a home loan, and the RSA is inadvertently included, the legitimate linking
of the savings account and home loan will not be invalid.
Clause 41 -
Certain uses of RSAs prohibited
16. Amendment (10) inserts a new
penalty provision in clause 41 of the RSA Bill. The purpose of this amendment
is to clarify that a penalty applies in respect of subclause 41(3) and
provides that an intentional or reckless contravention of that provision is an
offence.
Clause 41 - Certain uses of RSAs
prohibited
17. Amendment (11) omits the penalty provision after
subclause 41(4) which inadvertently imposed a penalty on RSA providers for
breaches of both subclauses 41(2) and (3). The intention of this
requirement is that only subclause 41(3) should be a penalty
provision.
18. Amendment (10) inserts a penalty provision in respect of
subclause 41(3).
Clause 50 - Duty to transfer balance of
RSA
19. Amendment (12) replaces subclause 50(2) of the RSA Bill in
order to clarify the maximum period of time allowed when transferring the
balance of an RSA.
20. In keeping with the intent that RSAs be fully
portable and controlled by the RSA holder, the amendment will clarify when the
RSA provider is required to transfer the balance of an RSA.
21. When an
RSA holder requests the RSA provider to transfer the balance of his or her
RSA:
• if the contract or agreement for the provision of the RSA specifies a notice period, the RSA provider must transfer the balance within that period; or
• if there is no notice period specified in the contract or agreement,
the RSA provider must transfer the balance as soon as practicable.
22. In any case, the balance must be transferred within 12 months after
receipt of the written request.
23. The ability of an RSA provider to
specify a notice period (within 12 months) will minimise liquidity risks and
ensure orderly administrative arrangements for RSA providers.
Clause
54 - Documents to be given to employees
24. Amendment (13) inserts a
penalty in clause 54 in order to provide that an RSA provider who intentionally
or recklessly contravenes this provision is guilty of an
offence.
25. Clause 54 requires the RSA provider to provide prescribed
information to an RSA holder (who has become an RSA holder as a result of his or
her employer making an application to open the RSA on his or her behalf) as soon
as practicable after providing the RSA.
Heading to Division 6 of Part
5
26. Amendment (14) amends the heading to Division 6 of Part 5 of
the RSA Bill in order to remove the reference to trust. This is consistent with
the amendments made by amendments (15) to (17).
Clause 60 - RSA
provider to comply with requirements of the regulations in relation to certain
money
27. Amendment (15) omits subclause 60(3) from the RSA Bill
which required an RSA provider to hold certain money on trust.
28. The
requirement to hold moneys, intended to be deposits, on an interim trust basis
is inconsistent with the depositor-creditor relationship that underlines the
usual commercial practices of deposit-taking institutions which will be RSA
providers.
29. In order to minimise administrative disruption to these
commercial practices, and avoid imposing an artificial trust concept on the
existing legal arrangements, the subclause will be deleted.
Clause 60
- RSA provider to comply with requirements of the regulations in relation to
certain money
30. Amendment (16) amends subclause 60(4) of the RSA
Bill to remove the reference to money being held on trust (refer amendment
(15)). Instead, the amendment will provide that the RSA provider is to comply
with the requirements of the regulations in relation to how the money is to be
held and dealt with.
Clause 60 - RSA provider to comply with
requirements of the regulations in relation to certain
money
31. Amendment (17) amends the penalty provision in subclause
60(5) to remove the reference to subclause 60(3), and is necessary as a result
of the amendment made by amendment (15).
Clause 81 - Payment of
unclaimed money to Commissioner of Taxation
32. Amendment (18)
inserts a definition of amount of unclaimed money specified in statement
for the purposes of clarifying the meaning of a component in the formula for
calculating the amount of unclaimed money that an RSA provider must pay to the
Commissioner of Taxation.
Clause 134 - RSA provider must request
person becoming holder of an RSA to quote tax file
number
33. Amendment (19) amends clause 134 of the RSA Bill by
extending the required time in which an RSA provider must request that a person
quote his or her tax file number to the RSA provider.
34. The required
time is extended from 7 to 30 days after the day on which the person becomes a
holder. This is consistent with the amendment being made by the Taxation Laws
Amendment Bill (No 4) 1996 to the equivalent provision in
subsection 299G(2) of the Superannuation Industry (Supervision) Act
1993.
Clause 181 - Commissioner may direct RSA institutions not to
accept employer contributions
35. Amendment (20) amends clause 181 of
the RSA Bill to insert a requirement that the relevant prudential regulator (if
any) must be consulted before the Commissioner issues a written notice directing
an RSA institution not to accept any contributions made to RSAs by a specified
employer.
36. Consultation with the relevant prudential regulator will
enable the Commissioner to be appraised of any potential systemic consequences
of directing an RSA institution not to accept any contributions made to RSAs by
a specified employer. It will also clearly signal to the market that the
issuing of such a direction is not indicative of prudential failings, but only
of the institution’s internal compliance capabilities in respect of
RSAs.
37. The Commissioner is both the prudential and functional
regulator of life insurance companies and therefore technically cannot consult
with himself. As such, the Commissioner will only be required to consult when
issuing a direction where there is a relevant prescribed regulatory
agency.
Clause 181 - Commissioner may direct RSA institutions not to
accept employer contributions
38. Amendment (21) amends the note in
subclause 181(6) of the RSA Bill to remove the reference to some amounts being
held in trust. The amended note will indicate that some amounts that are given
to an RSA provider will not be accepted as a contribution but must be held and
dealt with in the manner prescribed by the regulations.
39. This
amendment is necessary as a result of amendments made to clause 60.