Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Schedule 3
Amendment of the Superannuation (Resolution of Complaints) Act 1993
103. The Superannuation (Resolution of Complaints) Act 1993 (the SRC Act) provides for the establishment and operation of the Superannuation Complaints Tribunal (SCT) to resolve fund member complaints about trustee decisions in a manner that is fair, informal and quick.
104. The SRC Act is amended to improve the operation of the SCT and remove unintended unfairness in some areas of its operation.
105. This item inserts new section 7A in the SRC Act. The SRC Act sets out the requirements in relation to the establishment and constitution of the Tribunal, the objectives and functions of the Tribunal and administrative provisions relating to the Tribunal Chairperson and other Tribunal members. However, there is no statutory provision in the SRC Act which expressly confers on the Tribunal Chairperson responsibility for the overall operation and administration of the Tribunal. An amendment to make such a provision will facilitate smooth, efficient and consistent operation and administration of the Tribunal.
106. New section 7A provides that the Tribunal Chairperson is responsible for the overall operation and administration of the Tribunal. The Chairperson shall monitor the operations of the Tribunal, allocate its work among the members (including himself or herself and the Deputy Chairperson) and may establish written guidelines for the allocation of the work of the Tribunal
107. This item amends subsection 9(1) of the SRC Act. Section 9 of the SRC Act currently provides that three Tribunal members, selected by the Tribunal Chairperson, are required to make up a panel to review and make determinations in respect of complaints that cannot otherwise be resolved by inquiry and conciliation. This amendment allows the Tribunal to be constituted by either one, two or three members, selected by the Tribunal Chairperson, and will enable efficiency gains and increased case through-put to be achieved.
Item 3 - After subsection 9(1)
108. This item inserts new subsection 9(1A) in the SRC Act so that in circumstances where there is a perception of bias and where it is necessary for the timely operation of the Tribunal, the Chairperson may decide that a Tribunal panel should be reconstituted. Greater flexibility in this regard will increase the integrity of the SCT and improve the timeliness of reviews.
109. This item amends subsection 9(2)of the SRC Actas a result of the amendment, inserted by item 2, to allow a Tribunal panel to be constituted by either one, two or three members.
110. Subsection 9(2) provides that in selecting a Tribunal member or members to constitute a Tribunal panel, the Chairperson must take into account qualifications, experience and suitability having regard to the nature of the complaint.
Item 5 - After subsection 9(2)
111. This item inserts new subsections 9(2A) and 9(2B) into the SRC Actas a result of the amendment, inserted by item 2,to allow a Tribunal panel to be constituted by either one, two or three members.
112. Subsection 9(2A) provides that the Tribunal Chairperson is to formulate written guidelines setting out how the Tribunal will usually be constituted for the purposes of dealing with different classes of complaints. These guidelines are to be made available to the public. Subsection 9(2B) provides that subsections 9(3) to (5) only apply where the Tribunal is constituted by more than one member. Subsections 9(3) to (5) set out who is to preside at a Tribunal meeting and how a meeting is to be conducted.
113. This item amends subsection 9(4)of the SRC Actto insert a reference to subsection 9(3B). This amendment is necessary to rectify a drafting error when subsection 9(3B) was inserted by the Retirement Savings Accounts (Consequential Amendments) Act 1997. Subsection 9(4) provides that the conduct of a Tribunal meeting is to be in accordance with procedural rules established by the Chairperson.
114. This item amends subsection 14(1A) of the SRC Act.
115. Section 14A of the SRC Act was inserted by the Superannuation Industry (Supervision) Legislation Amendment Act 1995 (Act No. 144 of 1995) to enable complaints to be made to the SCT that the decision of a trustee to admit a person as a member of a life policy fund was unfair or unreasonable. A life policy fund is defined in subsection 3(2) as a regulated superannuation fund where the trustee maintains, in relation to at least some of the members of the fund, life policies covering those members.
116. Section 14A enables a person who has, or claims to have, an interest in a life policy fund, either as a member of the fund who is covered by a life policy maintained by the trustee or as a person claiming through such a member, to complain to the SCT that the decision of the trustee to admit the person to the fund was unfair or unreasonable.
117. Section 14 of the SRC Act enables complaints to be made to the SCT about decisions of trustees other than decisions to admit persons to life policy funds. Complaints made under section 14 are subject to a more limited range of remedies, and complaints that can be made under section 14A are expressly excluded from section 14.
118. The interaction of section 14 of the SRC Act and new section 14A has resulted in the inadvertent exclusion of certain complaints from the jurisdiction of the SCT that were able to be made prior to December 1995. The exclusion of complaints about decisions of trustees to admit persons as members of life policy funds from section 14 in subsection 14(1A) is too wide and precludes the two following types of complaints from being made under either section 14 or 14A.
119. First, where a person is a member of a life policy fund but is not covered by a life policy that person cannot complain under section 14A of the SRC Act, while subsection 14(1A) excludes all complaints concerning the decision of a trustee to admit a person to a life policy fund, even when that person is not covered by a life policy.
120. Second, the interaction of the wording of the transitional provisions, subsections 15D(2) and (3), and the exclusion provision in subsection 14(1A), has resulted in the unintended consequence of precluding complaints being made about trustee decisions to admit persons to life policy funds made prior to 12 December 1995 under either section 14 or 14A of the SRC Act.
121. New subsection 14(1A) enables complaints to be made about trustee decisions to admit a person to a life policy fund and where the trustee decision to admit a person to a life policy fund was made prior to 12 December 1995.
122. This item amends subsection 24A(1) to insert the words after reasonable inquiry after the word believes. Section 24A sets out notification procedures a trustee, insurer or RSA provider must follow regarding the payment of death benefits. Subsection 24A(1) requires a trustee who has been informed by the SCT that a complaint has been lodged in respect of its decision about the payment or proposed payment of a death benefit to notify all persons (other than the complainant) whom they believe may have an interest in the outcome of the complaint.
123. The insertion of the words after reasonable inquiry limits the obligation on the trustee to ascertain the persons who may have an interest in the outcome of a complaint.
Item 9 - Subsection 24A(1) (penalty)
124. This item repeals the penalty in subsection 24A(1). The penalty of imprisonment for one year may have had the effect of making trustees overly cautious in respect of death benefit payments as well as discouraging persons from becoming trustees. A penalty of 50 penalty units is inserted by item 16.
125. This item amends subsection 24A(2) to insert the words after reasonable inquiry after the word believes. This amendment is intended to clarify the extent of an insurers duty to notify all persons (other than the complainant) whom the insurer believes may have an interest in the outcome of the complaint under section 15B of the SRC Act.
126. The insertion of the words after reasonable inquiry limits the obligation on insurers to ascertain the persons who may have an interest in the outcome of a complaint.
Item 11 - Subsection 24A(2) (penalty)
127. This item repeals the penalty in subsection 24A(2). A penalty of 50 penalty units is inserted by item 16.
128. This item amends subsection 24A(2A) to insert the words after reasonable inquiry after the word believes. This amendment is intended to clarify the extent of an RSA providers duty to notify all persons (other than the complainant) whom the RSA provider believes may have an interest in the outcome of a complaint under section 15F of the SRC Act.
129. The insertion of the words after reasonable inquiry limits the obligation on RSA providers to ascertain the persons who may have an interest in the outcome of a complaint.
Item 13 - Subsection 24A(2A) (penalty)
130. This item repeals the penalty in subsection 24A(2A). A penalty of 50 penalty units is inserted by item 16.
131. This item amends subsection 24A(2B) to insert the words after reasonable inquiry after the word believes. This amendment is intended to clarify the extent of the insurers duty to notify all persons (other than the complainant) whom the insurer respectively believes may have an interest in the outcome of the complaint under section 15J of the SRC Act.
132. The insertion of the words after reasonable inquiry limits the obligation on insurers to ascertain the persons who may have an interest in the outcome of a complaint.
Item 15 - Subsection 24A(2B) (penalty)
133. This item repeals the penalty in subsection 24A(2B). A new lower penalty of 50 penalty units is inserted by item 16.
Item 16 - At the end of section 24A
134. This item inserts a penalty of 50 penalty units for a breach of subsection 24A(1), 24A(2), 24A(2A) or 24A(2B) and provides that it is necessary to prove that a failure to comply with the subsections was intentional or reckless.
135. Previously, to attract the penalty of imprisonment for one year it was not necessary to prove that a breach of the section was intentional.
136. This item amends subsection 37A(4) of the SRC Act. Section 37A of the SRC Act sets out the SCTs powers when reviewing a complaint made under section 14A that the decision of a trustee to admit a person to a life policy fund is unfair or unreasonable. In particular, subsection 37A(2) of the SRC Act sets out the powers of the SCT in relation to a decision of a trustee to admit a person to a life policy fund, for example, varying the trustees decision. Subsection 37A(3) sets out the powers of the SCT in relation to a life policy, for example, the SCT can set aside the policy and/or require monies paid under the policy to be repaid with interest. Subsection 37A(4) sets out the remedies in relation to the fund, for example, cancellation of membership or varying the governing rules of the fund.
137. The grant of a remedy under section 37A(4) is conditional upon the grant of a remedy under subsection 37A(3). This may restrict the effectiveness of an SCT determination where, for example, the complaint relates to a right under the governing rules of the fund which is not provided for by the policy. The SCT is not able to vary the governing rules or cancel membership, because no action will have been taken under subsection 37A(3) in respect of the policy.
138. This amendment provides that the grant of a remedy under subsection 37A(4) is not contingent upon the grant of a remedy under subsection 37A(3).
Item 18 - At the end of subsection 63(2)
139. This item inserts a penalty of 10 penalty units at the end of subsection 63(2). The penalty of 10 penalty units was previously inserted at the end of section 63. This amendment is intended to make clear the applicable penalty for subsection 63(2).
140. This item amends paragraph 63(3)(a) to remove the words if requested by the Commissioner to do so. Paragraph 63(3)(a) currently only allows the SCT to provide information to the Insurance and Superannuation Commissioner where the Commissioner requests information. This amendment enables the SCT to provide information to the Commissioner on request or when it considers it necessary.
141. This item repeals subsection 63(3B) and substitutes a new subsection 63(3B) into the SRC Act. Subsection 63(3B) prohibits the disclosure of personal information relating to an individual to another complaint-handling body unless the individual has consented in writing to the disclosure. Prior to this amendment, a breach could occur without having to prove that the breach occurred intentionally or recklessly.
Item 21 - Subsection 63(5) (penalty)
142. This item repeals the penalty for breach of subsection 63(2). The penalty for subsection 63(2) has been inserted into subsection 63(2) by item 18 above.