Welcome to the latest issue of the KHQ Super Alert. This week, APRA published the final official speech given by its outgoing Chair and issued a letter to RSE licensees on its intention to revoke certain reporting standards; while the Queensland Supreme Court published its anticipated decision in relation to the application of the Crimes Act to SFTs.
APRA – Publication of new quarterly superannuation industry statistics
On 20 October 2022, APRA released the first of its new quarterly statistical publications aimed at improving the ‘transparency of the superannuation industry’. APRA announced earlier this year (see our 29 July 2022 Super Alert) that the new quarterly publications would use data collected from the reporting standards implemented as part of Phase 1 of the Superannuation Data Transformation (SDT) project.
The quarterly publication includes data on the number and types of products and investment options available in the superannuation industry, member demographics (gender, age, account balances) and improved classification of MySuper product asset allocations. For example, according to APRA, ‘[o]f the $1.95 trillion in member assets held in [products issued by APRA-regulated entities], 41.5 per cent is held in MySuper products, 51 per cent in Choice products and 7.5 per cent in Defined Benefit products’.
This first publication does not include data on ‘[i]ndustry-level asset allocation, industry-level and MySuper fixed income investments and industry-level derivatives’ as reporting on these was first due on 29 July 2022. This data will be included in next quarter’s publication (expected to be released in February 2023).
Related to this, APRA announced on 21 October 2022 that it has released an additional frequently asked question (FAQ) on the reporting standards for Phase 1 of the Superannuation Data Transformation project (SDT project), and provided updates for another FAQ. The new question is ‘When will APRA revoke pre-SDT Reporting Standards that were replaced under Phase 1?’. The FAQ which has an updated response is ‘What are the due dates for submission of data under the new reporting standards?’.
Click here and here for details.
APRA – Publication of 2021/22 Annual Report
On 20 October 2022, APRA released its 2021/22 Annual Report, outlining its performance over the year, the management and accountability of APRA and its financial position and resources.
Click here for details.
ATO – Superannuation Guarantee ruling amendment
On 19 October 2022, the ATO amended Superannuation Guarantee Ruling 2009/2 Superannuation Guarantee: meaning of the terms ‘ordinary time earnings’ and ‘salary or wages’. The amendments remove the ‘$450 per month salary or wages threshold for the purposes of calculating an individual superannuation guarantee shortfall’ for the 1 July 2022 quarter onwards. It also reflects the ‘repeal of the Superannuation Guarantee (Administration) Regulations 1993 and its remake via the Superannuation Guarantee (Administration) Regulations 2018’.
Click here for details.
APRA – Chair Wayne Byres’ final speech published
On 19 October 2022, APRA published the final official speech of outgoing Chair Wayne Byres in which he offers ‘a few reflections on some of the themes that have dominated’ his tenure and ‘some lessons for the future’. He noted that the ‘most important and impactful of all the changes’ throughout his tenure has been the ‘[i]ncreased transparency forced upon the [superannuation] industry’. He emphasised that ‘information must be disclosed in a manner that is digestible and informative if it is to be useful.’
When commenting on community expectations and responsibilities he acknowledged that Parliament has been strengthening the powers and sanctions of regulators and regulators are expected to use them. He noted that ‘[n]o one wants a financial system that resembles the Wild West. Laws and regulators protect the community by reducing the probability of bad outcomes and limiting the impact when they occur. But there are limits to what can be achieved. Consumers of financial services still need to take a degree of responsibility for their decisions’.
Click here for details.
Queensland Supreme Court – Application of Crimes Act to successor fund transfers
On 19 October 2022, the Queensland Supreme Court published its decision in H.E.S.T Australia Ltd v Attorney-General (Qld) & Anor; Mercy Super Pty Ltd v Attorney-General (Qld) & Anor [2022] QSC 221. The two trustees each filed an application with the court seeking declaratory orders that the proposed SFT of Mercy Super members and assets into HESTA is not a ‘substituted appointment’ for the purposes of schedule 1, section 442F of the Criminal Code Act 1899 (Qld) and section 180 of the Crimes Act 1958 (Vic) (Offence Provisions).
The applications stem from a decision handed down by the New South Wales Supreme Court earlier this year about a similar provision in the Crimes Act 1900 (NSW) in BT Funds Management Limited (ACN 002 916 458) as trustee for the Retirement Wrap Superannuation Fund [2022] NSWSC 401 (BTFM). See our 20 May 2022 Super Alert for this decision.
Importantly, the Queensland Supreme Court declared that the proposed SFT would not amount to a substituted appointment for the purposes of the Offence Provisions.
Click here for details.
APRA – Life insurance statistics
On 18 October 2022, APRA published its biannual statistics on life insurance claims and disputes, which includes data on group life insurance offered by superannuation funds. This data is for the period 1 July 2021 to 30 June 2022. Some key findings for insurance through superannuation were:
- an industry average of 99% ‘claims accepted rate’ for death cover;
- an industry average of 91% ‘claims accepted rate’ for total and permanent disability cover; and
- an industry average of 97% ‘claims accepted rate’ for income protection cover.
Click here for details.
APRA – Revocation of Superannuation Reporting Standards
On 17 October 2022, APRA issued a letter to RSE licensees on the revocation of some reporting standards. To reduce duplicate reporting as a result of Phase 1 of the Superannuation Data Transformation (SDT), prior to 28 October 2022, APRA will revoke the following pre-SDT reporting standards:
- Reporting Standard SRS 533.1 – the last reporting period will be the period ending 30 June 2022;
- Reporting Standard SRS 703.0 – ‘licensees will need to submit an ad-hoc SRF 703.0’ form in Direct to APRA (D2A) ‘for any changes up to and including 1 October 2022’. 30 June 2022 will be the last annual reporting period; and
- Reporting Standard SRS 250.0 – the last reporting period will be 30 June 2022.
In addition, RSE licensees can request an ‘exemption to report the following sections from APRA for periods ending after 30 June 2022’:
- ‘Reporting Standard SRS 001.0 Profile and Structure (Baseline) – Part E of SRF 001.0;
- Reporting Standard SRS 601.0 Profile and Structure (RSE) – Items 5 and 6 of SRF 601.0;
- Reporting Standard SRS 610.0 Membership Profile – Items 1, 5 and 7 of SRF 610.0; and
- Reporting Standard SRS 610.2 Membership Profile – Items 5 and 7 of SRF 610.2.’
These pre-SDT reporting standards have partial overlap with Phase 1 reporting standards and APRA will seek to revoke them in the future.
Click here for details.
ASIC – Release of 2021-22 Annual Report
On 14 October 2022, ASIC released its 2021/22 Annual Report, outlining its key regulatory and enforcement outcomes. In the 2021/22 financial year, ASIC ‘secured $229.9 million in civil penalties’ and ‘convictions against 33 individuals.’
ASIC Chair Joe Longo commented that ASIC’s tools to ‘detect and deter wrongdoing’ in the financial services industry has considerably expanded since the Financial Services Royal Commission, highlighting the new obligations imposed by the ‘design and distribution’ framework and ‘the breach reporting regime’.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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