Jurisdiction - Australia
Australia – ‘Assets Through The Looking Glass’: A Trustee’s Investment Reporting Obligations.

14 November, 2013



Recent reforms include a range of new obligations for super trustees to report detailed information on the investment of their funds’ assets. Under these, both trustees and their service providers must be mindful of obligations to provide information about investments on a ‘look-through’ basis. This raises the questions:

  • How do the ‘look-through’ models proposed by APRA and ASIC differ? and
  • How far must a trustee ‘drill down’, in reporting on investments that are, in turn, invested in other vehicles?

We consider these issues below.

The Obligations

Look-through investment reporting requirements have been introduced under:

  • APRA’s Reporting Standards: various new APRA Superannuation Reporting Standards (SRSs), which guide a trustee in completing the accompanying Superannuation Reporting Forms (SRFs)1, and
  • Corporations Act requirements: the ‘portfolio holdings’ obligations in sections 1017BB and BC of the Corporations Act (Portfolio Holdings). 

There will necessarily be some overlap in the information to be reported under these two sets of requirements. However, it is important to understand the likely differences in scope.

APRA’s Reporting Model

In various of its Superannuation Reporting Standards and forms, APRA requires super trustees to ‘look through’ cascading investment structures to identify underlying financial products and other investments. However, APRA has made it clear in its recent FAQs that:

Look-through in APRA’s collection is where information about the underlying investment in an investment vehicle must be reported. This involves looking through cascading trusts to the first non-associated entity and reporting the ultimate asset class in which the investment is held.

Essentially (applying the SIS Act definition of ‘associate’), an entity is an ‘associate’ of another entity if it is a holding company or subsidiary, or the trustee of a trust benefitting that entity. An entity that does not meet this test will be a ‘non-associated entity’ for the purposes of APRA’s collection of information.

Contrasting Approach – Portfolio Holdings

On the other hand, the Portfolio Holdings obligations (as currently drafted) propose to operate on a basis that is likely to be both deeper and wider, given the following features:

  • ‘Hall of mirrors’ approach: at this stage, there is no specified limit as to the type or number of structures through which a trustee must trace the assets (and ‘assets derived from assets’) of a super fund (although there will necessarily be some jurisdictional limits where investment entities are located offshore),
  • Wider obligations facilitate tracing of super assets: supporting obligations are in place requiring super trustees and other interposed entities to request information from parties (such as custodians and investment managers) with whom an investment arrangement is in place. Those parties are required to provide information back to the trustee about the investment of the relevant super fund assets to enable the trustee to comply with its reporting obligations, and
  • Public disclosure required: information about the assets ultimately held, and the value of those assets, is required to be made publicly available on the super fund’s website no later than 90 days after each 6-monthly reporting day.  

The SIS Act Connection

While the two sets of requirements create distinct reporting obligations for different purposes, there is a connection. Under section 29QC of SIS Act, where:

  • a trustee is required to give information to APRA under an SRS that is required to be calculated in a particular way, and
  • the ‘same or equivalent information’ is given by the trustee to another person (including by publishing the information on a website),

then the trustee must ensure that the information given to the other person is calculated in the same way as the information given to APRA.

So, to the extent that Portfolio Holdings involves the reporting of the ‘same or equivalent information’ as information reported to APRA, then the form of the Portfolio Holdings information will be driven by the APRA requirements.

This raises a difficult question: will a trustee be justified in adopting APRA’s more limited look-through model for the purposes of any Portfolio Holdings disclosures? The policy intent behind the Portfolio Holdings in their current form suggests not. However, the precise scope of these requirements is yet to be settled, as discussed below.

We should point out that the Portfolio Holdings requirements are to be distinguished from another issue with which the super industry is currently grappling, being the requirement to disclose an ‘indirect cost ratio’ as a separate item under the amended fee disclosure regulations.2 While similar issues of scope may arise here, the approach ultimately adopted may differ.

Status And Timing

The status of the reforms is as follows:

  • Reporting standards have commenced: A number of relevant APRA reporting standards commenced operation on 1 July 2013. The balance of the SRSs apply to reporting periods ending after 1 July 2014.
  • First portfolio holdings ‘reporting date’ postponed: The Portfolio Holdings provisions commenced on 1 July 2013. However, under the last tranche of Stronger Super amendments passed in June, the first ‘reporting day’ was postponed to 1 July 2014.  According to Treasury, this was due to ‘the number of complex issues raised’ during consultation on the reporting requirements. Treasury noted that the issues would be addressed in amended regulations (to be developed in further consultation with the industry). The amended regulations have not yet been released.
  • Supporting obligations have commenced: Despite the delayed reporting date, trustees and other industry participants should be aware that the wider information obligations set out in section 1017BC are in effect. This means that trustees and other industry participants should be considering how and when they will seek information from product issuers and service providers. Once notified that assets invested are referrable to a specific super fund, parties receiving the notice will be under an obligation to provide appropriate portfolio holdings information to the trustee. However, as discussed below, a lack of settled detail on the form of reporting that will ultimately be required raises issues with seeking to comply at this stage.

Key Issues And Concerns

The introduction of look-through investment reporting requirements (both those included in APRA’s reporting forms and the Portfolio Holdings provisions) raises the following issues for trustees and other stakeholders:

  • Need to renegotiate agreements: renegotiation of a trustee’s service contracts (such as custodian agreements) may be required in order to provide information on a look-through basis,
  • Need for new and costly protocols: some have commented that there is currently a lack of standardised, automated protocols in the funds management industry sufficient to capture the information that would be required under either the SRSs or the Portfolio Holdings requirements,
  • Jurisdictional issues: arguably, these requirements contribute to the lack of a ‘level playing field’ between Australian and offshore fund managers (or those whose investment vehicles are domiciled outside of Australia), and
  • Public disclosure unattractive for certain managers: perhaps most significantly, the risk that certain investments will effectively become unavailable to Australian super funds, given that Portfolio Holdings will require public disclosure of the value attributed by a trustee to unlisted assets such as private equity and real property.

New Direction Under Current Government

The new Assistant Treasurer, Senator Arthur Sinodinos, has recently confirmed the Federal Government’s priorities in relation to financial services, including commitments to:

  • pursue a ‘deregulation agenda’, and
  • improve the comparability of super fund information without unnecessary compliance costs.

Indications are that further consultation on Portfolio Holdings disclosure will take into account concerns that have already been raised by the industry. New measures may include the introduction of a materiality threshold that must be met before investment values are reportable. We wait with interest to see what form the Portfolio Holdings information will take in the context of the Government’s proposed ‘light touch’ approach to regulation.



  1. Information must be provided to APRA on a look-through basis in (for example): Reporting Form SRF 530.0 Detailed Investments for Financial Position, Form SRF 530.1 Investments and Investment Flows, Reporting Form SRF 531.0Detailed Investments for Financial Performance, Reporting Form SRF 532.0Investment Exposure Concentrations.
  2. See Corporations Regulations 2001, Schedule 10, Part 1.


herbert smith Freehills



For further information, please contact:


Michael Vrisakis, Partner, Herbert Smith Freehills
[email protected]

Homegrown Fund Management Law Firms in Australia


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