Royal Commission into the banks - Advice to Trustee Directors
Phillip Sweeney made this Freedom of Information request to Australian Prudential Regulation Authority
This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.
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 Mr Sweeney
I acknowledge your FOI request as set out below. We are processing your request and will respond to you soon.
Kind regards
Ben Carruthers
FOI Officer
-----Original Message-----
From: Phillip Sweeney [mailto:[FOI #1930 email]]
Sent: Monday, 9 May 2016 4:34 PM
To: Freedom of Information <[email address]>
Subject: Freedom of Information request - Royal Commission into the banks - Advice to Trustee Directors
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
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[FOI #1930 email]
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Dear Mr Sweeney
Could you please clarify whether you seek:
1. a bulletin or letter that may have been circulated by APRA to all
trustees at the same time (i.e. an industry bulletin); or
2. a bulletin or letter that may have been sent by APRA to individual
trustees at various times.
Kind regards
Ben Carruthers
FOI Officer
-----Original Message-----
From: Phillip Sweeney
[mailto:[FOI #1930 email]]
Sent: Monday, 9 May 2016 4:34 PM
To: Freedom of Information <[email address]>
Subject: Freedom of Information request - Royal Commission into the banks
- Advice to Trustee Directors
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
-------------------------------------------------------------------
Please use this email address for all replies to this request:
[1][FOI #1930 email]
Is [2][APRA request email] the wrong address for Freedom of Information
requests to Australian Prudential Regulation Authority? If so, please
contact us using this form:
[3]https://www.righttoknow.org.au/change_re...
This request has been made by an individual using Right to Know. This
message and any reply that you make will be published on the internet.
More information on how Right to Know works can be found at:
[4]https://www.righttoknow.org.au/help/offi...
If you find this service useful as an FOI officer, please ask your web
manager to link to us from your organisation's FOI page.
-------------------------------------------------------------------
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IMPORTANT NOTICE:
This e-mail is intended solely for the person or organisation to whom it
is addressed, and may contain secret, confidential or legally privileged
information.
If you have received this e-mail in error or are aware that you are not
authorised to have it, you MUST NOT use or copy it, or disclose its
contents to any person. If you do any of these things, you may be sued or
prosecuted.
If you have received this e-mail in error, please contact the sender
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1. mailto:[FOI #1930 email]
2. mailto:[APRA request email]
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4. https://www.righttoknow.org.au/help/offi...
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
Dear Mr Sweeney
Please see attached, APRA's Notice of Decision dated 3 June 2016.
Kind regards
FOI Officer
[1]http://www.apra.gov.au/PublishingImages/...
--------------------------------------------------------------------------
IMPORTANT NOTICE:
This e-mail is intended solely for the person or organisation to whom it
is addressed, and may contain secret, confidential or legally privileged
information.
If you have received this e-mail in error or are aware that you are not
authorised to have it, you MUST NOT use or copy it, or disclose its
contents to any person. If you do any of these things, you may be sued or
prosecuted.
If you have received this e-mail in error, please contact the sender
immediately.
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References
Visible links