Superannuation clearing houses have been classified as financial product providers for the purposes of the Corporations Act, according to the Australian Securities and Investments Commission (ASIC).
Because they are facilities through which non-cash payments (NCP) are made, superannuation clearing houses and other electronic payment facilities have been captured under the existing licensing, conduct and disclosure provisions of the Corporations Act.
This means that superannuation clearing houses not already in possession of the appropriate Australian Financial Services Licence must meet this requirement “as soon as reasonably practicable”.
ASIC Policy Statement 185 Non-cash payment facilities also states that providers must comply with the relevant disclosure requirements such as providing members with a Product Disclosure Statement (PDS).
It defines a superannuation clearing house as a service provided to an employer whereby the employer distributes or forwards superannuation contributions to an employee’s chosen superannuation fund.
According to ASIC director of regulatory policy and research Mark Adams: “ASIC considers that superannuation clearing houses and electronic payment facilities are ordinarily financial products for the purposes of the Corporations Act because they are facilities through which non-cash payments can be made.
“Accordingly, in most cases, ASIC expects providers of superannuation clearing houses and electronic payment facilities to comply with the licensing and disclosure provisions of the Corporations Act.”
ASIC’s general policy on how it would regulate NCP facilities was published in November 2005 in PS 185. This did not explicitly deal with superannuation clearing houses, but determined that a fact-find would be completed to better understand their operation.
PS 185 also includes the factors that ASIC will consider in determining eligibility for individual or class order relief.
On a case-by-case basis, these criteria will be applied under exemption and modification powers contained in either chapter seven of the Corporations Act, ASIC’s general policy on granting relief from either general licensing, or product disclosure requirements or those specific to NCP facilities.
