Who does this affect?

All life companies, responsible entities and superannuation trustees.

What do you need to do?

Update plans for product rationalisation.

Authors
Michelle Levy  
Partner

Michael Mathieson  
Senior Associate

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Michelle Levy  
Partner
T +61 2 9296 2437

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John Edstein  
Partner
T +61 2 9296 2129

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Today at the IFSA Conference, Geoff Miller from the Government’s Product Rationalisation Panel provided some insight into what the Government’s final product rationalisation proposal might look like.

Superannuation Out?

Mr Miller noted that there is already a workable rationalisation process for superannuation funds, suggesting that legislative reform may be restricted to managed investment schemes and life policies.

Independent Approval?

Mr Miller’s view was that Court approval for rationalisation should be required only as a last resort, but that there still needs to be independent examination of proposals and expert opinion provided.

What will the “no disadvantage” test look like?

There will be a “no disadvantage” test. However, its formulation is difficult:

• one-to-one equivalence is unlikely to facilitate a transfer;
• it is too difficult to formulate a detailed test;
• while a principles-based test is desirable, it needs to ensure sufficient consumer protection.

Will product rationalisation be available to all legacy products?

There will be tax relief for product rationalisation. However, the other side of this is that product rationalisation schemes cannot be allowed to be used to rationalise poorly performing products. Therefore, we need a tight definition of legacy products.

What might a rationalisation process look like for MIS?

While a successor fund-type process for managed investment schemes is being considered so is the possibility of merely reducing the voting requirements for the rationalisation of schemes.

Nick Sherry also announced this morning at IFSA that we should have a final Government proposal for comment by the end of the year with legislation to follow shortly afterwards.