Recent changes to section 101 of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) require superannuation fund trustees to provide written reasons for decisions in relation to complaints. The Corporations Regulations 2001 (Cth) (Corporations Regulations) have also recently been amended to ensure that complainants are aware that they can request reasons from a trustee, and the process for doing so.
The changes to section 101 of the SIS Act, effective 1 July 2013, were contained in the fourth tranche of the Stronger Super legislation, the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Act 2013 (Cth) which received Royal Assent on 26 June 2013. The changes to the Corporations Regulations, also effective 1 July 2013, were contained in the Superannuation Legislation Amendment (MySuper Measures) Regulation 2013 (Cth) registered on 28 June 2013.
The new rules
Under the new rules, trustees must:
in relation to death benefit complaints, provide written reasons for decisions at the time the complainant is given notice of the decision;
in relation to non-death benefit complaints, provide reasons for decisions upon request by the complainant in writing;
if no decision is made in relation to a complaint within 90 days after it was made, and the complainant, by written notice to the trustee, requests written reasons for the failure to make a decision within that period, provide those reasons within 28 days.
Previously, there was no legislative requirement for trustees to provide written reasons for decisions in relation to complaints. Trustees have only been required to take reasonable steps to ensure that there are arrangements in place for complainants to have the right to make a complaint, and for complaints to be properly considered and dealt with within 90 days.
Many trustees have been reluctant to offer reason for their decisions, whether to complainants or more generally, given well-established trust law principles that reasons need not be given, and, if volunteered, may be exposed to scrutiny by the Courts.
Trustees must review their approach
With the new rules, trustees will need to review their approach, and re-consider how they document their complaint handling processes in a manner that will support their new obligations to give reasons.
Trustees should be aware that, if the Superannuation Complaints Tribunal (SCT) becomes aware of a contravention of section 101 of the SIS Act or of regulations 7.9.48 to 7.9.48D of the Corporations Regulations, it will inform ASIC, as it is required to do under section 64 of the Superannuation (Resolution of Complaints) Act 1993 (Cth).
The legislation does not prescribe the level of detail to be included in written reasons for decisions. The explanatory statement does not shed any light, nor has ASIC released any guidance to the industry as to its expectations of trustees in this regard. Trustees will need to form their own view as to what is appropriate, bearing in mind that the new rules are intended to provide the complainant with an understanding as to why a trustee has made its decision, and, presumably, some comfort that the complaint has been properly considered. The reasons should therefore be directed towards that end, with a clear statement of the matters that the complainant would need to know in order to understand the response to their complaint. However, in determining the appropriate level of detail to provide complainants, we expect that trustees will need to walk a fine line between providing helpful information to the complainant, and including unnecessary detail that might expose the fund to further complaint or might prejudice the trustee’s position in any proceedings.
Trustees should review their complaint handling arrangements to ensure that there is a methodical process for the consideration and internal recording of trustee decisions in relation to complaints. Ideally, the internal record of decision should be prepared in a manner that will facilitate the ready preparation of a ‘statement of reasons’ to be provided to the complainant.
The trustee’s response to the complainant must of course be factually correct and capable of being substantiated with appropriate evidence, particularly since the matter may subsequently be heard by the SCT or Court and the documentation relied upon by the trustee in making its decision would need to be produced at such time.
The trustee’s response to the complainant must also disclose the following matters set out in the Corporations Regulations:
If a decision is made in relation to a complaint, then the trustee must (within 30 days of making the decision) inform the complainant:
- of the date of the decision;
- about the external dispute resolution system that covers their complaint (ie the SCT); and
- about how that system may be accessed;
- If a decision is made in relation to a non-death benefit complaint, the trustee must (within 30 days of making the decision) inform the complainant that:
- the complainant can, in writing, request written reasons for the decision made by the trustee; and
- the trustee must respond to the request within 28 days or within the extended period if one is granted by ASIC;
- If no decision is made in relation to a non-death benefit complaint, the trustee must (within 45 days of the complaint) inform the complainant that:
- if a decision is not made within 90 days of the complaint, then the complainant can, in writing, request written reasons for the non-decision; and
- the trustee must respond to a complainant’s request for written reasons for the non-decision within 28 days or within the extended period if one is granted by ASIC.
We would be pleased to assist you with any queries.