Welcome to the latest issue of the KHQ Super Alert. It has been a relatively quiet week in the industry this week. ASIC has provided an update in relation to its financial advice remediation activities and APRA has published its ‘Year in Review’ publication for 2020. The House of Representatives has also released transcripts from its hearings in relation to the operation of the superannuation sector.
ASIC – Financial advice remediation
On 12 February 2021, ASIC issued a media release advising that as at 31 December 2021, $1.24 billion has been paid in compensation by six of Australia’s largest financial institutions ‘to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice’. These compensation payments have been made as a result of reviews conducted by ASIC in 2015 in relation to:
- ‘the extent of failure by the institutions to deliver ongoing advice services to financial advice customers who were paying fees to receive those services’; and
- ‘how effectively the institutions supervised their financial advisers to identify and deal with ‘non-compliant advice’ – i.e. personal advice provided to a retail client by an adviser who did not comply with the relevant conduct obligations in the Corporations Act, such as the obligations to give appropriate advice or to act in the best interests of the clients, at the time the advice was given’.
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APRA – 2020 Year in Review
On 5 February 2021, APRA released its ‘Year in Review’ publication for 2020. The publication ‘provides APRA’s view on the financial environment and details its key activities for the year across the banking, insurance and superannuation industries, conducted in alignment with the strategic objectives outlined in its Corporate Plan’.
In relation to the superannuation industry, APRA’s key takeaways in 2020 were that:
- ‘[o]perational resilience was…tested on a number of fronts. Funds’ administration functions had to be quickly ramped up to process the high volumes of [early release] applications and deal with higher volumes of member inquiries’;
- ‘APRA increased its supervisory intensity and had regular (sometimes daily) calls with fund executives and directors throughout April and May [in relation to the processing of high volumes of early release applications]. APRA gathered additional information on liquidity positions and stress testing results to understand trustees’ estimates of the impact of the [early release scheme]’; and
- the MySuper heatmap ‘shone a light on those funds that are failing their members…[and] APRA will continue to refine the heatmap in 2021…working towards expanding it to cover insurance and choice products’.
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Parliament – Standing Committee on Economics
On 3 February 2020, the House of Representatives Standing Committee on Economics conducted a further hearing in relation to its review of the superannuation sector. The Committee heard from three additional trustees and has now published the transcript of the hearing.
Click here for details.
