Welcome to the latest issue of the KHQ Super Alert. This week APRA published a speech delivered by Helen Rowell which focused on APRA’s expectations for underperforming funds and Senator Jane Hume published a speech with similar comments. Additional guidance has been issued by APRA in relation to APRA Connect and regulations have been registered to support the new arrangements for ongoing financial advice to members.
APRA – speech by Deputy Chair
On 21 May 2021, APRA published a speech delivered by Deputy Chair Helen Rowell. Ms Rowell’s comments included:
- “…superannuation is still a numbers game, where the ultimate determinant of success is measured by the monetary benefits delivered to members in retirement…some of the numbers we are seeing still work against the best interests of members: too many funds overall, too many underperforming funds, fees that need to come down further, and a number of funds that probably lack the scale needed to deliver optimum member outcomes over the medium- to long-term”;
- “The emerging industry view seems to be that any fund with less than around $30 billion in assets under management is increasingly going to be uncompetitive…[APRA expects] trustees to consider whether a small fund to small fund (or bus-stop) merger is going to tackle underlying issues or just be a temporary stop on the way to the ultimate destination of sustainability”;
- “Later this year, APRA will release a new cross-industry prudential framework for recovery, resolution and exit planning”; and
- “APRA will also seek to strengthen investment decision-making and governance practices…[i]n the middle of the year, we will release a consultation package including an updated Prudential Standard SPS 530 Investment Governance”.
Click here for details.
Senate – Minister for Superannuation speech
On 19 May 2021, Senator Jane Hume published a speech delivered during the week. In relation to the Your Future, Your Super reforms, Ms Hume made the following comments:
- the government is “calling for comment on the draft regulations underpinning the changes… have a say before the twenty-fifth of May this year”, for example “[y]ou can comment on the information that must be included with the notice of an Annual Members’ Meeting”;
- “the Government has listened and made several amendments to strengthen the performance test, such as including administration fees” which “focuses the test on the final member outcome and is consistent with information presented to consumers via the online YourSuper comparison tool”; and
- “[f]or many underperforming funds, trustees will reach the inescapable conclusion that their members are better off being part of a better fund – indeed if our reforms prompt a trustee to hand over the keys to someone who will do a better job on behalf of their members – that is a welcome outcome of our reforms”.
Click here for details.
Treasury – proposed financial institutions supervisory levies
On 18 May 2021, Treasury issued a discussion paper seeking “submissions on the proposed financial institutions supervisory levies for the 2021-22 financial year”. These levies propose “to recover the operational costs of APRA and other specific costs incurred by certain Commonwealth agencies, including the Australian Securities and Investments Commission, the Australian Taxation Office, and the Australian Competition and Consumer Commission”. The consultation period closes on 11 June 2021.
Click here for details.
APRA – further APRA Connect guidance
On 17 May 2021, APRA published new guidance for trustees to prepare for APRA Connect. According to APRA, a ”test environment is planned to be available from 17 June 2021 and will be a permanent feature for entities to become familiar with the interface and functionality of APRA Connect and trial submission of entity information and data”. APRA has outlined what is expected from trustees to prepare for the September 2021 commencement of APRA Connect.
Click here for details.
Legislation – ongoing advice arrangements
On 14 May 2021, the Financial Sector Reform (Hayne Royal Commission Response—Advice Fees) Regulations 2021 were registered on the Federal Register of Legislation. These regulations amend the Corporations Regulations 2001 “to specify the records that fee recipients must keep to evidence compliance with the obligations for ongoing arrangements” and the Electronic Transactions Regulations 2020 “to enable written consents in relation to financial product advice fees paid out of a superannuation interest to be provided electronically”.
Click here for details.
Reminder
Consultation on the Your Future, Your Super exposure draft regulations closes next week on 25 May 2021 – click here for details.
