{"id":"F2007L02104","name":"Superannuation Industry (Supervision) modification declaration No. 1 of 2007","slug":"superannuation-industry-supervision-modification-declaration-no-1-of-2007","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":67211,"registerId":"commonwealth-F2007L02104-current","compilationNumber":null,"startDate":"2026-04-02","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Superannuation Industry (Supervision) modification declaration No. 1 of 2007","content":"![](image.001.png)\n\nSuperannuation Industry (Supervision) modification declaration No. 1 of 2007\n\nSuperannuation Industry (Supervision) Act 1993\n\nI, Thomas Karp, a delegate of APRA, under section 332 of the Superannuation Industry (Supervision) Act 1993 (the Act), DECLARE that regulation 4.16 of the Regulations has effect in relation to the class of persons described in the attached Schedule, as if it were modified in the manner specified in the attached Schedule.\n\nThis declaration comes into force on 1 July 2007.\n\nDated 28 June 2007\n\n\\[Signed\\]\n\nThomas Karp\n\nExecutive General Manager\n\nSupervisory Support Division\n\nInterpretation Document ID: 129791\n\nIn this instrument\n\nAPRA means the Australian Prudential Regulation Authority.\n\nFederal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.\n\nRegulations means the Superannuation Industry (Supervision) Regulations 1999.\n\nNote 1 This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (the LIA) (see section 5 and Item 15 of section 7 of the LIA). Under section 56 of the LIA, the obligation under section 336 of the Act, to publish this exemption in the Gazette, is satisfied by its registration on the Federal Register of Legislative Instruments.  \n  \n  \nNote 2 Under paragraph (zb) of the definition of reviewable decision in subsection 10(1) of the Act, the decision to make this declaration is a reviewable decision. If you are dissatisfied with this decision, you may request APRA to reconsider it in accordance with subsection 344(1) of the Act. The request for reconsideration must be made in writing, must set out the reasons for making the request, and must be given to APRA within 21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Appeals Tribunal Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision.\n\nNote 3 The address where the request for reconsideration referred to in this instrument may be given to APRA, is Level 26, 400 George Street, Sydney, NSW 2000.  \nSchedule - the class of persons to whom this declaration applies\n\nSchedule - the class of persons to whom this declaration applies\n\nAll RSE Licensees\n\n  \nSchedule – the manner in which the specified modifiable provisions are modified\n\nRegulation 4.16 of the Regulations is modified by including, after subregulation 4.16(6):\n\n(6A) Subregulation (6) does not apply to a material outsourcing agreement between an RSE licensee of a registrable superannuation entity and a custodian, to the extent that:\n\n(a) the agreement or arrangement is between:\n\n(i) the custodian and a sub-custodian; or\n\n(ii) a sub-custodian and another sub-custodian; and\n\n(b) the material outsourcing agreement contains a provision that the custodian accepts responsibility for any liability arising from the failure of any sub-custodian to exercise reasonable care in the custody of the assets of the registrable superannuation entity.\n\n(6B) For the purposes of subregulation (6A), the liability of a custodian to an RSE licensee must not be dependent upon any recovery of losses by the custodian from any sub-custodian.\n\n(6C) For the purposes of subregulations (6A) and (6B), a sub\\-custodian means a person (other than an RSE licensee of a registrable superannuation entity or a securities depository) who, under a written contract with a custodian or another sub-custodian, performs any custodial function, in relation to the assets of a registrable superannuation entity, that the custodian is required to perform under a written contract with the RSE licensee of the registrable superannuation entity.\n\n(6D) For the purposes of subregulation (6C), securities depository means a book-entry or other settlement system or clearing house or agency through which a custodian or a sub-custodian may transfer, settle, clear, deposit or maintain securities, whether in certificated or uncertificated form, and includes any services provided by any network service provider or carriers or settlement banks used by a settlement system or clearing house or agency.","sortOrder":0}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"flash_summary":{"complexity_score":4,"scope_assessment":{"changed":true,"description":"The declaration narrows the application of regulation 4.16(6) by creating an explicit exemption for material outsourcing agreements involving custodians and sub‑custodians where the custodian accepts direct liability for sub‑custodian failures and that liability is not contingent on recoveries. This modifies the prior regulatory scope by permitting specified custody chains and reallocating loss‑bearing from RSE licensees to custodians (see Schedule, subregs (6A)–(6D))."},"complexity_factors":["Narrow, targeted amendment limited to regulation 4.16 via Schedule (simple textual change) — Schedule, para introducing (6A)-(6D).","Reallocation of legal liability from RSE licensees to custodians requires contractual clarity and may affect pricing and contract negotiations between RSE licensees, custodians and sub‑custodians — Schedule, subreg (6A) and (6B).","Condition that custodian liability not be dependent on recovery from sub‑custodian introduces a concrete payment obligation that affects custodian balance‑sheet risk and insurers — Schedule, subreg (6B).","Definitions and scope for who counts as a sub‑custodian and what constitutes a securities depository are technical and affect cross‑border custody chains and settlement arrangements — Schedule, subregs (6C) and (6D).","Applies to a broad class (all RSE licensees), so operational and compliance changes are widely dispersed though the regulatory text change is small — Schedule heading: All RSE Licensees.","Potential interaction with existing outsourcing controls in reg 4.16(6) and other prudential expectations requires legal review of existing contracts to ensure consistency."],"plain_english_summary":"This declaration changes one regulation so that, for all RSE licensees, a custodian can enter material outsourcing arrangements with sub‑custodians or between sub‑custodians where the custodian contractually accepts liability for a sub‑custodian’s failure to take reasonable care. The custodian’s liability cannot be made contingent on recovering losses from the sub‑custodian. APRA (by delegate) makes the decision; the change shifts legal loss‑bearing from super funds to appointed custodians and alters contracting and risk‑management choices for RSE licensees."},"kimi_summary":{"content_quality":"ok","complexity_score":4,"scope_assessment":{"changed":false,"description":"This modification declaration stays within its original scope. It is a targeted, technical amendment to a specific regulation (4.16) regarding outsourcing arrangements. It does not expand beyond the original purpose of the Superannuation Industry (Supervision) framework, which governs how super funds operate and manage risks. The modification is precisely calibrated to address a practical operational issue (sub-custodian arrangements) without broadening the regulatory scheme."},"complexity_factors":["Multiple layers of defined terms: 'sub-custodian' is defined in (6C), which itself references 'custodian' and 'RSE licensee' from the parent regulations","Nested conditional logic: the exemption in (6A) depends on conditions in (a) and (b), which then interact with (6B) and (6C)","Cross-references to external regulations: relies on understanding Regulation 4.16(6) of the Superannuation Industry (Supervision) Regulations 1999, which is not reproduced in this instrument","Technical financial terminology: 'securities depository', 'book-entry settlement system', 'custodial function' assume industry knowledge","Exception to a rule structure: requires understanding what the original rule required before understanding what the modification exempts"],"plain_english_summary":"This declaration creates a targeted exception to the rule requiring super funds to hold direct contracts with sub‑custodians. If a fund’s appointed custodian legally accepts full responsibility for sub‑custodian errors and that liability isn’t contingent on recovering funds from the sub‑custodian first, the direct-contract requirement is waived. It eases operational burden for RSE licensees that rely on global sub‑custody networks while preserving fund protection through the custodian’s guarantee."}},"importantCases":[],"_links":{"self":"/api/acts/superannuation-industry-supervision-modification-declaration-no-1-of-2007","history":"/api/acts/superannuation-industry-supervision-modification-declaration-no-1-of-2007/history","analysis":"/api/acts/superannuation-industry-supervision-modification-declaration-no-1-of-2007/analysis","conflicts":"/api/acts/superannuation-industry-supervision-modification-declaration-no-1-of-2007/conflicts","importantCases":"/api/acts/superannuation-industry-supervision-modification-declaration-no-1-of-2007/important-cases","documents":"/api/acts/superannuation-industry-supervision-modification-declaration-no-1-of-2007/documents"}}