Dear Australian Prudential Regulation Authority,

The first duty of any trustee is to obey the terms of the trust. If the trustee is a corporate trustee, then it is a duty of every director to acquaint themselves with the terms of the trust and to ensure the corporate trustee executes the trust.

If the corporate trustee administers more than one trust, then the directors must acquaint themselves with the terms of each trust.

This is a duty that cannot be delegated.

Many directors who are appointed to the Boards of the trustees of superannuation fund do not have legal qualifications and so many may not be aware of this fundamental duty and the implications of liability in the event of a breach of trust.

With the consolidation of superannuation funds over the last decade, some corporate trustees now administer dozens of “sub-funds”, each with their own terms (Regulations).
Austin J in Arakella Pty Ltd v Paton (No. 2) [2004] NSWSC 605 refused to relieve the directors of a commercial trust from a personal liability for a breach of trust during a period of time where they had failed to acquaint themselves with the terms of the trust and where they had delegated this duty to an accountant who was not a director.

However Austin J did relieve the directors from a potential personal liability for a breach of trust for the period after they had obtained legal advice and had acquainted themselves with the terms of the trust and had then acted in accordance with these terms.

This ruling by Austin J is clearly significant for the directors of the trustees of regulated superannuation funds, especially when read in conjunction with Section 57 of the Superannuation Industry (Supervision) Act 1993.

Familiarisation with the terms of a superannuation trust (fund) or sub-fund is part of the care and diligence that a director of a corporate trustee is required to exercise.

The directors of corporate trustees have some different and significant legal obligations compared to the directors of other commercial entities such as lending banks and insurance companies which are also regulated by APRA.

The document I seek is a copy of an information bulletin or similar letter or document that APRA has circulated to Trustees with a RSE licence advising the directors of the need to familiarise themselves with the terms of each trust (fund) or sub-fund under the administration of the corporate trustee.

This information bulletin may or may not make specific reference to the case mentioned above.

This FOI request and response may be tendered as evidence to a Royal Commission into the banks.

Yours faithfully,

Phillip Sweeney

Dear Freedom of Information,

This is an example of a Bulletin or brochure published by APRA.

file:///D:/AAAAAAA%20Communication%20Pack/AAAA-%20Royal%20Commission/APRA/APRA%20Publications/APRA_Brochure.pdf

In this document it is stated that APRA promotes safety and soundness in business behaviour and risk management.

Advising trustees of regulated superannuation funds on the need for trustee Directors to acquaint themselves with the terms of the superannuation trusts under their stewardship would be an important aspect of such promotion. This is a fundamental aspect of the role of a trustee Director.

The "Insight" documents are bulletins which provides information on APRA’s main policy initiatives and on key developments in the financial industries that APRA supervises.

APRA also publishes "Information Papers". For Example

http://www.apra.gov.au/Super/Documents/I...

APRA publishes Standards such as SPS 520 which requires that Directors have "competence".

The first item on any "competence" list would be the need of a Director to acquaint him or her self with the terms of each superannuation trust under the stewardship of the corporate trustee. This is one task that cannot be delegated to someone else.

Therefore the document(s) I seek would be a document published by APRA such as those listed above as general advice which would apply to all trustees and not a document that may have only been sent to one particular trustee or a few trustees at different times

Yours sincerely,

Phillip Sweeney