After several years of discussion with the industry and delays on its introduction, the Government has proposed in new draft legislation a simpler disclosure requirement on portfolio holdings by super funds.
The new proposals, described in this explanatory memorandum published last week stop at the underlying fund or product level in most cases. They represent a victory for industry groups such as the Australian Custodial Services Association which had argued about the costs and lack of benefits associated with the previous plan of full disclosure of all underlying investments, including private equity and hedge fund holdings.
The former position dates back to 2012 but introduction of its requirements was delayed until July 2016 while ACSA and others negotiated with Treasury and APRA.
The Government’s memorandum published last week says: “Consultation on the current [portfolio holdings disclosure] obligations have indicated that there are significant compliance costs in collecting and collating data for all assets held indirectly (held by third parties). Concerns have also been raised by some superannuation funds about the requirement to disclose data, which relates to private equity investments, unlisted assets and other commercial in confidence arrangements.
The amendments in this Bill will address the comments in the consultation and other concerns raised by industry.”
It says two important changes are:
. The ‘registrable superannuation entity’ (RSE) must publish, for each of its investment options, information about the nature and value of financial products or other property that the RSE, or an associated entity… has directly invested in. The obligation to include information about financial products, or other property that non-associated entities have directly invested in will be repealed; and
. 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and arrangements that acquire a financial product using the assets, or assets derived from assets, of an RSE will be repealed.
The Government also introduced proposed changed to the MySuper dashboard aimed at providing simpler comparisons between fees, risk and return for funds (details in the same explanatory memorandum).
In separate legislation, choice of fund will be extended to approximately 40 per cent of the estimate 2 million workers who currently do not have it through their employment arrangements.
Interested parties have until January 20, 2016 to comment on the discussion paper.
* Greg Bright is publisher of Investor Strategy News (Australia)