Welcome to the latest issue of the KHQ Super Alert – a packed edition! This week, Parliament reintroduced the FAR and CSLR Bills and the amendments to annual members’ meeting notice requirements were finalised and registered on the Federal Register of Legislation. Treasury released a consultation paper seeking feedback on the Your Future, Your Super reforms and ASIC released findings from its most recent review of life insurance claims handling.
Parliament – FAR Bill reintroduced to Parliament
On 8 September 2022, the Financial Accountability Regime Bill 2022 (Cth) was introduced to the House of Representatives. The previous 2021 version of the Bill lapsed upon dissolution of Parliament on 11 April 2022. This 2022 version is identical, other than changes to some dates. In a related media release, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones, advised that the introduction of this legislation will implement one of two ‘major outstanding legislative measures’ recommended by the Royal Commission.
Click here and here for details.
Parliament – CSLR Bills reintroduced to Parliament
On 8 September 2022, the Financial Sector Reform Bill 2022 (Cth), the Financial Services Compensation Scheme of Last Resort Levy Bill 2022 (Cth) and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2022 (Cth) were introduced into the House of Representatives. A few clarifying changes have been made, but otherwise these Bills are identical to the 2021 Bills of the same name which lapsed upon the dissolution of Parliament (although the Financial Sector Reform Bill 2022 has been expanded to also capture proposed amendments to the National Consumer Credit Protection Act 2009 (Cth)).
On the same day, Treasury released for public consultation exposure draft regulations to support these Bills. It is proposed that the ‘regulations [will] specify matters relating to the CSLR operator’s reporting requirements and identify persons upon whom a levy will be imposed…[and] also outline the methods that underpin the calculation for the amount of levy payable and how they differ based on the type of levy being imposed’.
Consultation will close on 7 October 2022.
Click here here for details.
Parliament – Bill to change performance test for faith-based products
On 8 September 2022, the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022 (Cth) was introduced to the House of Representatives. The Bill proposes to amend the Superannuation Industry (Supervision) Act 1993 (SIS Act) to ‘provide for a supplementary annual performance test for faith-based products’. This Bill follows Treasury’s consultation on this topic as referred to in our Super Alert of 22 July 2022.
Click here for details.
ASIC – Review of marketing by managed funds
On 8 September 2022, ASIC issued a media release in relation to its recent surveillance of marketing materials released by managed funds.
The key matters which ASIC called out for the materials were:
- ‘[m]arketing must give balanced messages about returns, features, benefits and significant risks’;
- ‘[r]isk disclosure needs to be clear and prominent’;
- ‘[t]he safety, reliability or security of an investment should not be overstated’;
- ‘[c]omparisons with other products or benchmarks must be appropriate and reasonable’; and
- ‘[c]are must be taken with the use of images, graphs and tables to ensure they are not confusing’.
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Government – Publication of speech delivered by Assistant Treasurer and Minister for Financial Services
On 7 September 2022, the Government published a speech delivered by the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP. The key messages were as follows:
- ‘this week [the Government will] be introducing the final draft of the legislation to implement the recommendations of the Hayne Royal Commission and the bill…will set up for the first time a compensation scheme of last resort so that the victims of financial malfeasance, when a finance industry organisation falls over will, have some compensation’;
- in terms of the Your Future Your Super reforms review, the Government is particularly interested in hearing about ‘the impact of stapling on insurance and group insurance and how that impacts on a fund member as they move from one industry to another industry but are stapled to the original funds’; and
- the Government would like ‘to see some of the friction removed from the [successor fund transfer] process so that funds who have decided that it is in the best interests of their members to merge…that those processes occur swiftly and with less friction than is currently within the process’.
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ASIC – Publication of speech delivered by Commissioner
On 7 September 2022, ASIC published a speech delivered by its Commissioner Danielle Press. Ms Press provided an update to the industry about what to expect from ASIC over the next five years. The main messages in the speech were that ASIC:
- expects trustees ‘to be sophisticated and mature in how [they] develop, govern, monitor, and market super products, placing [the] members in the centre of [all] decision making’;
- is ‘undertaking reviews about the distribution of choice products, the retirement income covenant, performance test failure communications, insurance in superannuation, trustee oversight of advice fee deductions and trustee transparency’; and
- considers there is ‘a genuine opportunity to capture and harness the data in the super system to better understand the financial future of Australians and what we can all do to help safeguard it’.
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Treasury – Your Future, Your Super reforms review
On 7 September 2022, Treasury released a consultation paper in relation to a review of the Your Future, Your Super reforms. The Government seeks to understand ‘whether there have been any unintended consequences and implementation issues’ of the Treasury Laws Amendment (Your Future, Your Super) Act 2021, and in particular in relation to the:
- ‘Performance test
- YourSuper comparison tool
- Stapling
- Best financial interests duty’.
The consultation period closes on 14 October 2022.
Click here for details.
APRA – Speech by Margaret Cole published
On 7 September 2022, APRA published a speech delivered by APRA Member Margaret Cole. Ms Cole provided an update in relation to APRA’s upcoming activities. Her comments included:
- APRA expects that ‘performance testing, in some shape or form, is here to stay’ however the Government’s review of the performance test ‘will give industry the opportunity to have a say as to what a future evolution of the Your Future Your Super reforms could include’;
- ‘APRA has been pushing into the topic of board renewal, skills and capability and size and effectiveness of boards’ and will ‘continue to focus on this’; and
- an ‘issue for the relative near-term horizon for both APRA and ASIC is operationalising the Financial Accountability Regime’.
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APRA – Two prudential practice guides released for consultation
On 6 September 2022, APRA released for consultation draft ‘guidance to accompany its two new prudential standards on financial contingency and resolution planning’. The two Prudential Practice Guides (CPG 190 Financial Contingency Planning and CPG 900 Resolution Planning) ‘set out principles and examples of better practice to assist [APRA-regulated] entities to meet their requirements under the proposed new standards CPS 190 Financial Contingency Planning and CPS 900 Resolution Planning’.
A final version of CPS 190 is expected later this year, and a final version of CPS 900 is expected to be released in the first half of 2023. The practice guides are expected to be finalised in the first half of 2023 (after a three-month consultation period). CPS 190 and CPS 900 are expected to come into effect in the beginning of 2024.
Consultation will close on 6 December 2022.
Click here for details.
Legislation – AMM notice amendments finalised
On 2 September 2022, the Superannuation Industry (Supervision) Amendment (Annual Members’ Meetings Notices) Regulations 2022 were registered on the Federal Register of Legislation. As referred to in our Super Alert from 22 July 2022, these regulations amend the requirements of annual members meeting notices. They:
- align the definition of ‘accounting standard’ with the one in the Corporations Act 2001;
- align the definition of ‘related party’ to the definition in the Australian Accounting Standards;
- ‘enable funds to provide contextual information in their short-form summary of expenditures’;
- require funds to ‘itemise all expenditures on political donations’; and
- require funds to ‘detail in aggregate’, amounts spent on promotion, marketing or sponsorship, industrial body payments, and related party payments.
‘These amendments apply in relation to a notice of an annual members’ meeting for a superannuation entity if:
- the notice is given after the commencement of this item (9 September 2022); and
- the year of income ends on or after 30 June 2022’.
Click here and here for details.
Treasury – Miscellaneous amendments released for consultation
On 2 September 2022, Treasury released an exposure draft Bill and regulations in relation to miscellaneous amendments to Treasury portfolio laws 2022. According to Treasury, ‘the amendments seek to ensure the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes’.
Amendments to the SIS Act include:
- changing where APRA discloses notices about disqualifying decisions to align with modern practice. APRA would now publish the notice in a notifiable instrument (instead of the Gazette) when it makes a decision disqualifying persons from acting in certain capacities;
- clarifying that annual members meetings can be held virtually, and that wholly virtual meetings are acceptable. This will include inserting the definition of ‘virtual meeting technology’ to align the SIS Act with the definition in the Corporations Act; and
- amending section 117, which currently states that in order to pass a resolution in support of paying any money to an employer, a trustee board be made up of an equal number of employer representatives and member representatives. This would instead be amended to require a trustee board comply with the ‘basic equal representation rules’ in the SIS Act (to account for boards which have additional independent directors).
Consultation will close on 29 September 2022.
Click here for details.
ASIC – Releases findings from review into life insurance claims handling
On 2 September 2022, ASIC issued a media release in relation to its findings in its most recent review of life insurance claims handling. Between 1 January and 1 June 2021, ASIC reviewed nearly 4800 disability income insurance claims and found that insurers need to do more to ensure ‘that consumers are protected from unfair practices in non-disclosure investigations and physical surveillances’.
Among other things, the review found that:
- ‘non-disclosure investigations were conducted in around 5% of claims (252) and physical surveillance was conducted in around 1% of claims (57 claims)’;
- ‘40% of non-disclosure investigations related to mental health non-disclosure’; and
- ‘physical surveillance was used in 10 mental health claims and ASIC considers that surveillance may have been unwarranted in half of these cases’.
Click here for details.
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