Master trust providers would be handed some administrative relief under regulatory exemption proposals laid out by the Financial Markets Authority (FMA).
In a consultation document published last week, the FMA proposes easing certain disclosure obligations for ‘multiple participant schemes’ (MPS) – better known as superannuation master trusts – currently required by the Financial Markets Conduct Act (FMC).
“The proposal is to exempt these managers from the requirement to register participation agreements entered into with the various employers they service which form part of the scheme’s governing document,” the FMA consultation says.
As well as citing potential technical difficulties in loading and accessing master trust participation agreements – which detail scheme contracts with underlying employer groups – on the Disclose register, some industry players have slated the disclosure requirement on commercial secrecy grounds.
“We have been told that the participation agreements may contain commercially sensitive and/or confidential information,” the FMA document says. “For example information about employer contribution rates or negotiated variations to various fees (eg. administration or management fees). Some MPS managers have indicated that they consider making this information publicly available may be commercially detrimental.”
Stand-alone super schemes, which are not covered by the proposed exemption, currently must publish governing documents on Disclose that “may contain the same types of confidential information”, the regulator says.
While the FMA broadly accepts the rationale for exempting master trusts from public disclosure of the participation agreements, the proposal includes a few caveats.
“… if granted, we think the exemption should be subject to appropriate conditions to ensure members have easy access to the information they need to make decisions about their investment, and to support effective monitoring by supervisors and the FMA,” the consultation document says.
The FMA conditions would require MPS managers to: supply participation agreements free to members; notify members of where to source the agreements and when any “material change” occurs; and, publish a current list of underlying employers contracted to the master trust on the Disclose website.
Furthermore, the regulator has floated the idea of a size threshold for the exemption as master trusts with few employer members would not face an onerous administrative burden.
“However we note that issues about sensitive information may be of general application to MPSs,” the FMA says. “Given this, we invite input generally on whether a size threshold for the exemption would be appropriate.”
Deadline for submissions has been set down for March 17.