Welcome to the latest issue of the KHQ Super Alert. APRA issued an Information Paper and a Determination related to its approach when combining MySuper product performance histories for the annual performance test. ASIC and APRA released a joint speech given about implementation of the retirement income covenant, and ASIC has taken action against a super fund trustee for alleged ‘greenwashing’, which is a current enforcement priority for ASIC.
ASIC – Greenwashing case commenced in the Federal Court
On 11 August 2023, ASIC issued a media release announcing that it has commenced civil penalty proceedings ‘alleging misleading conduct and misrepresentations to the market’ against LGSS Pty Limited (the trustee of Active Super). According to the media release, ‘ASIC alleges Active Super exposed its members to investments it claimed to restrict or eliminate’, and that the ‘ESG misrepresentations were made on Active Super’s website, disclosure documents and on Facebook, Instagram and LinkedIn’.
Click here for details.
APRA – Information Paper released about combining MySuper product performance histories in annual performance test
On 9 August 2023, APRA released its response to a consultation it conducted earlier this year relating to combining investment history in the annual performance test (see our Super Alert from 21 April 2023). The response came in the form of a Superannuation Technical Determination (discussed in the next item), a background letter to RSE licensees and an information paper titled Combining MySuper product performance histories – APRA’s approach – August 2023 (Information Paper).
The Information Paper ‘outlines the approach APRA takes when combining the performance histories of two or more MySuper products’ and ‘APRA’s approach to providing investment performance data to the [ATO] for inclusion in the YourSuper comparison tool’.
Click here for details.
Legislation – Determination amending performance test benchmarks registered
On 8 August 2023, Superannuation Technical Determination No. 1 of 2023 – Actual and benchmark return formulae modifications (Determination) was registered on the Federal Register of Legislation. According to the Explanatory Statement, this Determination ‘modifies the actual and benchmark formulae used to conduct the annual performance assessment for MySuper lifecycle Part 6A products’ and ‘will apply in circumstances where there has been a change of lifestage for a MySuper product’. For example, where a single strategy MySuper product changes to a lifecycle MySuper product, this is referred to as a ‘change in lifestage’.
Click here for details.
APRA – Joint speech with ASIC in relation to implementation of the retirement income covenant
On 8 August 2023, APRA released a joint speech presented by APRA Deputy Chair Margaret Cole and ASIC Senior Executive Leader Jane Eccleston. Ms Cole shared APRA’s observations on the implementation of the retirement income covenant and outlined APRA’s expectations for further improvement. Ms Cole commented that ‘[a]ll customers of the superannuation system are entitled to rely upon their superannuation fund for assistance…[and] all acknowledge…that the Australian community is not yet sufficiently well-supported in this regard’.
Ms Eccleston outlined ASIC’s future work relating to the implementation of the retirement income covenant (‘having regard to its consumer protection mandate’) and provided clarification on three misunderstandings related to the thematic review report recently released jointly by the regulators (see our Super Alert from 21 July 2023). The misunderstandings were:
- ‘without being able to provide personal financial advice to members there is little progress that can be made on retirement outcomes for members’;
- ‘[m]ore data is itself the solution’; and
- ‘[c]ollecting data on members results in the provision of personal financial advice’.
Click here for details.
Legislation – Instrument extending relief for foreign financial services providers registered
On 7 August 2023, ASIC Corporations (Amendment) Instrument 2023/588 was registered on the Federal Register of Legislation. This Instrument extends the AFSL licensing relief provided to foreign financial advisers in previous ASIC Instruments until 31 March 2025. According to the Explanatory Statement, the previous instruments ‘conditionally exempt foreign financial services providers (FFSPs) from the requirement to hold an Australian financial services (AFS) licence when providing specified financial services in Australia’ to wholesale clients in certain circumstances.
In a media release published the following day, ASIC confirmed that this continues to be transitional relief only. The next item relates to the permanent relief proposed.
Click here and here for details.
Treasury – Consultation in relation to draft AFSL exemption for foreign financial services providers
On 7 August 2023, Treasury released for consultation draft legislation aimed at permanently providing AFSL licensing relief ‘to foreign financial services providers (FFSPs)’. The draft legislation titled Treasury Laws Amendment (Measures for Future Bills) Bill 2023: Licensing exemptions for foreign financial services providers seeks to introduce:
- ‘a comparable regulator exemption’;
- ‘a professional investor exemption’;
- ‘a market maker exemption’; and
- ‘an exemption from the fit‑and‑proper person assessment to fast‑track the licensing process for FFSPs authorised to provide financial services in a comparable regulatory regime’.
The consultation period closes on 8 September 2023.
Click here for details.
Treasury – Consultation in relation to managed investment scheme regulatory framework
On 4 August 2023, Treasury released for consultation a paper titled Review of the regulatory framework for managed investment schemes (Consultation Paper) seeking ‘feedback on the appropriateness of the existing regulatory settings for managed investment schemes’. Specific topics of consultation include:
- ‘the thresholds that determine whether an investor is a wholesale client’;
- ‘whether certain managed investment schemes should be marketed and sold to retail clients’;
- ‘the roles and obligations of responsible entities’;
- ‘whether ‘investor rights’ for people who invest in managed investment schemes are appropriate’;
- ‘liquidity requirements for managed investment schemes’;
- ‘whether an insolvency regime is required for managed investment schemes’; and
- ‘interactions between Commonwealth and State laws when regulating real estate investments by managed investment schemes’.
Earlier this year we published an article summarising Treasury’s proposed consultation – click here for details.
The consultation period closes on 29 September 2023.
Click here and here for details.
Legislation – Non-confidential superannuation reporting standard disclosures
On 3 August 2023, the Australian Prudential Regulation Authority (confidentiality) determination No. 3 of 2023 (Instrument) was registered on the Federal Register of Legislation. This Instrument ‘provides that certain information given to APRA under the reporting standards listed in the instrument is non-confidential’. For example, information reported to APRA as part of the following forms is considered not to be confidential: SRF 251.0 Insurance arrangements; SRS 611.0 Member Accounts; SRS 705.0 Components of net return; and SRF 706.0 Fees and Costs Disclosed.
Click here for details.
Legislation – Commonwealth penalty unit increased
On 30 June 2023, the Crimes (Amount of Penalty Unit) Instrument 2023 was registered on the Federal Register of Legislation. This Instrument increases the amount of the Commonwealth penalty unit to $313 (as a result of indexation) on and from 1 July 2023.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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