Welcome to the latest issue of the KHQ Super Alert. The High Court has handed down its decision in ASIC’s financial advice phone campaign case, which now provides important case law in relation to the distinction between general and personal advice. In other developments, the ATO and APRA have released materials in relation to their planned activities for 2021.
High Court – personal advice phone campaign
On 3 February 2021, the High Court handed down its decision in Westpac Securities Administration Ltd v ASIC [2021] HCA 3. The Full Court of the Federal Court had previously decided this matter in favour of ASIC, relating to the question of whether financial product advice that Westpac gave to members was personal advice. The relevant Westpac entity’s AFSL only authorised general advice to be provided to members.
The High Court considered that a key issue in interpreting section 766B(3)(b) of the Corporations Act was ‘whether a reasonable member might expect that Westpac has in fact considered one or more of the member’s objective, financial situation and needs and not whether the member might expect that Westpac should have considered those circumstances’. It agreed with the Full Federal Court’s decision and decided the matter in favour of ASIC.
This was on the basis that section 766B(3):
- ‘is directed to the protection of the retail client, who is often without the skills, knowledge or information to make informed decisions’; and
- has clear purpose because it ‘focuses on what a reasonable person would expect “the provider” – not the retail client – to have done…[The] notion of “considered” includes not only circumstances involving a certain type, level or duration of consideration (as where there is an opportunity for active, mature, intellectual reflection over time) but also where an adviser provides a prompt or immediate response’.
ASIC welcomed the decision in an associated media release as an important case which ‘clarifies the difference between general and personal advice for consumers and financial services providers’. The matter will return to the Federal Court for a hearing on penalties.
Click here for details.
ATO – superannuation changes roadmap
On 2 February 2021, the ATO released an updated roadmap in relation to upcoming changes which will impact the superannuation industry. Among other things, the roadmap sets out the ATO’s timeline for designing and building functions to implement the Your Super, Your Future reforms, as well as implementing the increase to the superannuation guarantee rate from 1 July 2021.
Click here for details.
APRA – supervision and policy priorities
On 1 February 2021, APRA released two documents which set out its policy and supervision priorities for 2021. According to APRA, its key priorities and supervision activities include:
- ‘finalising and implementing a revised prudential standard on remuneration, a key Royal Commission recommendation that remains outstanding’;
- ‘strengthening crisis preparedness, including the development of a new prudential standard on resolution and recovery planning, taking into account the lessons and learnings of the past 12 months’;
- ‘updating prudential standards on operational risk, governance and risk management, and consulting with industry on guidance for climate change financial risk’;
- ‘supporting implementation of the government’s Your Future, Your Super reforms to improve member outcomes’;
- ‘increased scrutiny of entities’ cyber security capabilities’; and
- ‘addressing areas of MySuper underperformance, taking enforcement action where appropriate and providing greater transparency through the expansion of the heatmaps to include Choice products’.
Click here for details.
APRA – annual superannuation bulletin
On 29 January 2021, APRA released its annual superannuation bulletin which ‘provides an overview of the superannuation industry…[with] information on funds and membership profile, key financial performance metrics, financial position, fees and expenses’. The bulletin covers the statistics for the industry for the financial year ended 30 June 2020.
According to APRA:
- ‘[o]ver the five years from June 2015 to June 2020, total superannuation industry assets increased by 44%’;
- ’91% of fees [were] paid by members and the remaining balance largely paid by employer sponsors or from reserves’; and
- ‘[t]he number of member accounts decreased by 11.7% over the year…to a significant extent, by sweeps of inactive low-balance account [to] the ATO’.
Click here for details.
