Welcome to the latest issue of the KHQ Super Alert. Among other developments, this week Treasury commenced consulting on changes to the regulations for annual members’ meetings and the application of the performance test for faith-based products. APRA has also released information about amendments to two prudential standards: CPS 511 Remuneration and SPS 530 Investment Governance.
Treasury – Proposed performance test amendments for faith-based products
On 20 July 2022, Treasury commenced the consultation process in relation to the Treasury Laws Amendment (Measures for a later sitting) Bill 2022: Faith-based products. According to the draft explanatory memorandum, the purpose of the Bill is to amend the SIS Act ‘to provide for a supplementary annual performance test for faith-based products’. A product will be determined to be a faith-based product if APRA approves an application made by the trustee where the trustee certifies that ‘the product uses a faith-based investment strategy and that this is disclosed in its regulated disclosures and marketing materials’. If approved, these products will need to pass either the current annual performance test, or this supplementary performance test for faith-based products.
The consultation period closes on 16 August 2022.
Click here for details.
APRA – Changes to definition of significant financial institution in prudential standards
On 20 July 2022, APRA issued a letter to all regulated funds which sets out its ‘response to feedback received on proposed changes to the definition of a significant financial institution (SFI)’. As referred to in our Super Alert of 8 April 2022, APRA consulted with industry in relation to its proposed approach for all prudential standards to use the same definition of an SFI. Relevant to trustees, Prudential Standard CPS 511 Remuneration has now been amended to reference this common definition.
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AFCA – Complaint numbers in the past financial year
On 20 July 2022, AFCA issued a media release summarising the number of complaints received in the 2021/22 financial year. According to AFCA, the numbers were ‘a rise of 3 per cent on the previous financial year’, however most complaints relate to the top 4 banks and top 4 insurers. For all other financial firms, the number of complaints ‘lodged against them was 5% lower than in the previous 12 months’.
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APRA – Proposed revisions to SPS 530 Investment Governance finalised
On 19 July 2022, APRA released the final version of Prudential Standard SPS 530 Investment Governance which will commence on 1 January 2023. As referred to in our Super Alert of 1 October 2021 when the consultation period commenced, the focus of the updates is to ‘enhance stress testing, valuation and liquidity management practices’. APRA has released its response to industry submissions as part of the latest package of documents.
Click here for details.
Treasury – Regulations proposed to amend annual members’ meeting notice requirements
On 15 July 2022, Treasury commenced a consultation process in relation to the Superannuation Industry (Supervision) Amendment (Annual Members’ Meetings Notices) Regulations 2022. According to the draft explanatory statement, the purpose of the regulations is to ‘reduce the regulatory burden for RSE licensees’ by:
- removing ‘itemised disclosure of certain expcenditure’;
- removing ‘the double counting of certain expenditure’; and
- aligning ‘the definition of ‘related party’ to the definition in the Australian Accounting Standards’.
The consultation period closes on 28 July 2022.
Click here and here for details.
ATO – Transfer balance cap reporting guidance
On 15 July 2022, the ATO released guidance in relation to the administrative requirements for transfer balance cap reporting following changes to the law earlier this year. The guidance explains how the Treasury Laws Amendment (Allowing Commutation of Certain Income Streams) Regulations 2022 (Cth) should be applied to superannuation.
Click here for details.
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