ISSUE 3 10 AUGUST 2010

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1 ISSUE 3 10 AUGUST 2010 In this issue: SUPERANNUATION SUPERANNUATION Identify theft alert Superannuation drawdown relief INSURANCE Group purchasing bodies for insurance and risk products Brokers report modest premium increases FINANCIAL PLANNING Licensing starts under new national consumer credit laws SEMINARS August October 2010 Identity theft alert The Australian Taxation Office (ATO) has advised the Australian Prudential Regulation Authority (APRA) that in a number of cases fraudulent ATO correspondence is being used as evidentiary documentation to support rollover applications submitted to APRA regulated funds. APRA has sent a letter to all the trustees of APRA regulated superannuation funds to inform them on the matter. Accordingly, APRA has provided the following information: the falsified documentation is the Australian Business Register (ABR) letter issued to self managed superannuation fund upon registration; the known falsified ABR documentation typically provides details of an operating SMSF which is not associated with the requesting member; the SMSFs which are targeted generally tend to have a similar name to that of the requesting member; this is misusing the identity of an unrelated complying SMSF; the targeted SMSF is listed on the Super Fund Look Up (SFLU), and therefore appears complying generally allowing rollover request applications to be processed; when these rollover requests are approved by an APRA regulated fund, the rollover cheque is forwarded to a postal address nominated on the rollover request which is different to the address listed for the SMSF on SFLU; the addresses nominated on these fraudulent rollover requests are the postal box addresses leased by the perpetrator(s); it is believed that these rollover amounts are never returned to the members.

2 What to look out for? APRA warns that the false ABR documentation used has the following features: no official ATO letterhead; incorrect font (i.e. font is bolded); postal address listed on the documentation does not reflect the fund address on SFLU (one of the checks recommended in APRA s 5 February 2010 letter); alignment of fields are skewed; two trustee names are listed in the one document (only one name should appear, and additional trustees on a separate page). APRA recommends that trustees do not proceed with the rollover, and provide a copy of the fraudulent document when contacting the ATO at Super- IER@ato.gov.au in cases where they detect a fraudulent ABR document which supports a rollover application. Source Australian Prudential Regulation Authority, Letter to Trustees of APRA Regulated Superannuation Funds, Fraud alert: SMSF identity fraud and theft of superannuation benefits, 5 May Superannuation drawdown relief On 30 June 2010, the Government announced it would extend the drawdown relief being provided for account-based superannuation pensions during This change required amendments to the Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Accounts Regulations The necessary legislation have been amended. Source Superannuation Industry (Supervision) Amendment Regulations 2010 (No. 3): 360BBD32738ECA A37EC/$file/ A100705ZEV.pdf Retirement Savings Accounts Amendment Regulations 2010 (No. 3): 20BD7D1AE17CA F54E/$file/ A100705ZEV.pdf

3 INSURANCE Group purchasing bodies for insurance and risk products What are group purchasing bodies? Group purchasing bodies are persons who arrange or hold cover under risk management products for others but neither issue risk management products (other than interests in a risk management scheme) nor provide any financial product advice (other than as a result of providing certain general information), according to the Australian Securities & Investments Commission (ASIC) s Regulatory Guide 195 for group purchasing bodies for insurance and risk products. For example, An industry association might arrange for Personal Accident and salary continuance policies for its staff. A sporting association might arrange cover for its officials and other voluntary workers. A Personal Accident policy can be set up to cover Volunteer Workers (volunteers do not have to pay any premium to be covered). The activities of group purchasing bodies may constitute providing financial services under Chapter 7 of the Corporations Act 2001 (Corporations Act) because they include dealing in a financial product and providing financial product advice. However ASIC has given certain group purchasing bodies relief from the Australian financial services (AFS) licensing because they believe the requirements are disproportionately burdensome for them. The relief is only available to eligible group purchasing bodies and is subject to certain conditions. Who are the eligible group purchasing bodies? A group purchasing body will be eligible for relief if: it is independent; or its activities in arranging cover under a risk management product are incidental to its not-for-profit activities. ASIC has given relief because they consider regulation under Chapter 7 is disproportionately burdensome and not necessarily appropriate, given the activities of group purchasing bodies.

4 What are the conditions of relief? Group purchasing bodies that are eligible for relief must meet key conditions relating to: disclosure of basic information to persons who are to be covered; and receipt of payments. If the relief conditions are not met, the group purchasing body must notify ASIC promptly after it has reason to believe that it has materially failed to comply with the conditions, or the relief will no longer apply. Source Australian Securities & Investments Commission, Regulatory Guide 195 for group purchasing bodies for insurance and risk products, June /RG195%20(Final).pdf Brokers report modest premium increases Domestic insurance policies are the only lines to show significant premium increases in the first half of 2010, according to the latest survey by the National Insurance Brokers Association (NIBA). The survey of members, completed after the June 30 renewals period, found that while the majority of brokers reported increases of 10-30% for domestic policies, which include home and car insurance, there were more modest increases of less than 10% for most commercial lines of insurance. Source National Insurance Brokers Association, Brokers report modest premium increases, 21 July 2010.

5 FINANCIAL PLANNING Licensing starts under new national consumer credit laws The licensing of providers of consumer credit, credit assistance and intermediaries by ASIC started 1 July 2010 following a three month registration period. Registered persons now have until 31 December 2010 to apply for an Australian credit licence or become an authorised representative of another registered person or credit licensee. Registration closed on 30 June If entities or individuals have not registered, the law requires that they stop engaging in credit activities until they are granted a credit licence or have become a representative of another registered person or credit licensee. There are civil and criminal penalties under the National Credit Act for persons that provide regulated credit without being registered or holding a credit licence or authorisation. Source Australian Securities & Investments Commission, ASIC Credit Reform Update, Issue 20, 21 July 2010.

6 SEMINARS August October 2010 August 16 ASFA NSW, Corporate Funds Discussion Group Sydney Go to August 17 ASFA VIC, Investment Discussion Group August 17 ASFA NSW, Legislation Discussion Group Sydney Go to August 18 AILA VIC, Importers and Exporters: Product Liability Pitfalls Melbourne Go to August 18 FPA NSW, The Referable Planner Sydney Go to August 18 FPA QLD, The Referable Planner Brisbane Go to August 19 ASFA VIC, Legislation Discussion Group August 19 ANZIIF VIC, Liability Discussion Group (LDF) Seminar on Cyber Liability August 19 ANZIIF VIC, Fundamentals of Motor Vehicle Insurance August ANZIIF NSW, ANZIIF/ AICLA Claims Convention 2010: Claims Excellence

7 August 23 ANZIIF VIC, Goldseal Building Client Relationship Workshop August 24 ASFA VIC, Small Funds Discussion Group August 24 ANZIIF VIC, VIC s Protect your Business from a Hire gone Haywire - Goldseal August 24 ANZIIF NSW, SMUG IAG Research Centre Tour August 25 ASFA VIC, Member Services Discussion Group August FPA NSW, Futures for Financial Planning in Australia Sydney Go to August 27 ANZIIF VIC, Generation i: Leaders of Our Pack Luncheon August 31 FPA VIC, The Referable Planner Melbourne Go to September 1 ASFA VIC, Fund Taxation Discussion Group September 1 ANZIIF VIC, Challenging conversation Workshop Level 2 September 2 ANZIIF WA, Breakfast Forum Series 3: Subrogation and Contribution Perth Go to

8 September 2 ANZIIF VIC, Presented by Goldseal: Telephone Communication Skills Workshop September 2 ANZIIF VIC, Presented by Goldseal: Negotiation Skills Workshop September 3 ANZIIF NSW, Building Client Relationships Workshop September 7 ASFA VIC, Compliance Discussion Group Melbourne Group Go to September 9-10 FPA VIC, Estate Planning Course Melbourne Go to September 14 ANZIIF WA, Introduction to Reinsurance Workshop Perth Go to September 16 ANZIIF QLD, Generation i Trivia Night Brisbane Go to September 15 ASFA VIC, Legislation Discussion Group September 21 ASFA NSW, Legislation Discussion Group Sydney Go to September 21 ANZIIF VIC, Essentials of Risk Management Workshop September 23 ANZIIF NSW, Generation i Leader or Our Pack Luncheon

9 September 23 ASFA NSW, Superannuation Accountants Discussion Group Sydney Go to September FPA NSW, Futures for Financial Planning in Australia Sydney Go to September 28 ANZIIF NSW, Essentials of Industrial Special Risks Insurance Workshop September 28 ANZIIF QLD, The Facts About the Insurance contracts Act Brisbane Go to September 28 ASFA VIC, Small Funds Discussion Group September 29 ASFA VIC, Member Services Discussion Group September 30 ANZIIF NSW, Managing Personal Effectiveness Workshop September 30 ASFA NSW, Small Funds Discussion Group Sydney Go to October 5 ANZIIF NSW, Essentials of Life Insurance and Superannuation October 12 ANZIIF WA, Essentials of Industrial Special Risks Perth Go to October 14 ANZIIF QLD, Generation i Leaders of Our Pack Brisbane Go to

10 October 18 & 25 ANZIIF WA, Understanding Professional Indemnity Insurance Perth Go to October 19 ANZIIF VIC, Essentials of Insurance Law Workshop October 19 AILA NSW, Insurance Fundamental Series Life Insurance Policies Go to October 20 ANZIIF NSW, Negotiation Skills Workshop October 21 ANZIIF NSW, The Facts About the Insurance Contracts Act October 26 ANZIIF NSW, General Insurance Cod of Practice Workshop October 28 ANZIIF VIC, Liability Discussion Group (LDG) Seminar October 28 ANZIIF WA, General i: Seminar Perth Go to October 28 ANZIIF NSW, Essentials of Insurance Law Workshop October 29 ANZIIF VIC, Executive Breakfast Series 3 Aon Consulting Pty Limited ABN AFS Licence While care has been taken in the production of this document and the information contained in it, Aon Consulting Pty Limited does not make any representation as to the accuracy of this report and accepts no liability for any loss incurred by any person who may rely on it. In all cases, any recipient shall be entirely responsible for their use of this document Aon Corporation Australia Limited