Welcome to the latest issue of the KHQ Super Alert. This week an ASIC Instrument was registered which makes changes to the breach reporting rules for misleading and deceptive conduct. The final versions of CPS 900 Resolution Planning and CPS 190 Recovery and Exit Planning were also registered.
Legislation – Amendments to ASIC breach reporting for misleading and deceptive conduct
On 19 October 2023, the ASIC Corporations and Credit (Amendment) Instrument 2023/589 was registered on the Federal Register of Legislation. The purpose of this instrument is to amend the Corporations Act so that certain breaches of the ‘prohibitions on misleading and deceptive conduct or false and misleading representations’ in the Corporations Act and the ASIC Act are not reportable breaches. For example, misleading and deceptive conduct may no longer need to be reported to ASIC where the breach only impacts ‘one consumer’ and involves ‘no financial loss or damage, or likely financial loss or damage’. Prior to this instrument being registered, a breach of these provisions was reportable to ASIC whether the contravention was significant or insignificant.
In addition, licensees will now have ‘up to 90 days to report a reportable situation (a related reportable situation) that has underlying circumstances that are the same as, or substantially similar to, underlying circumstances of an earlier reportable situation that the licensee has reported to ASIC’.
The Explanatory Statement explains that these changes have been made because the current ‘automatic reportable situation has led to a large volume of…breaches being reported to ASIC that have little or no intelligence value…[and] involves a cost for licensees with little regulatory benefit’.
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Federal Court – Decision in relation to stay application for AFCA determination
On 18 October 2023, the Federal Court of Australia handed down a brief but interesting judgment in relation to a stay application made by an insurer following an AFCA determination.
In Resolution Life Australasia Ltd v Teagle (Stay Application) [2023] FCA 1244, the insurer made an application to the Federal Court ‘to stay the operation of a superannuation determination’ made by AFCA. The insurer has separately appealed the AFCA determination; however, until the appeal is heard, the insurer continues to have an obligation to give effect to the AFCA determination and pay the required TPD benefit to the relevant member.
The insurer’s primary argument was that if it paid the TPD benefit prior to the appeal, and its appeal was ultimately successful, then there was ‘a real risk’ that the relevant member would not repay the insurer. The Federal Court dismissed the application as it was not satisfied that it was ‘appropriate to grant a stay of AFCA’s determination pending the appeal’. The Court did not consider that a stay was ‘appropriate to secure the effectiveness of the hearing and determination of the appeal’ because ‘the evidence [did] not go far enough to establish a well-founded apprehension that the payment will not be able to be recovered’.
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ATO – Involvement in PayDay Super consultation
On 17 October 2023, the ATO issued two news updates explaining that it has ‘been working with Treasury and a wide range of industry bodies to co-design the measure[s]’ relating to the ‘PayDay Super’ proposal. The ATO has explained that the proposal will ‘better enable [the ATO] to recover unpaid super from employers’ and the final design ‘will be determined by Government and considered as part of the 2024–25 Budget’. See our Super Alert of 13 October 2023 for further information in relation to the current Treasury consultation.
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Legislation – Final versions of CPS 900 and CPS 190 registered
On 16 October 2023, the final versions of Prudential Standard CPS 900 Resolution Planning and Prudential Standard CPS 190 Recovery and Exit Planning were registered on the Federal Register of Legislation. Both prudential standards commence on 1 January 2024. See our Super Alerts of 2 December 2022 and 19 May 2023 for further background in relation to the industry consultation which occurred for these two standards.
Click here and here for details.
ASIC – Annual Report for 2022/23 released
On 13 October 2023, ASIC released its annual report for 2022-23. In the associated media release, ASIC explained that it ‘commenced more than 130 new investigations in 2022–23’, with product design and distribution being one of its focus areas. The annual report explains that ‘close to 80 interim stop orders’ were issued during the year. In relation to superannuation specifically in the past financial year, ASIC’s annual report explains that its focus was ‘on increasing trustees’ compliance with IDR obligations and continuing to improve the insurance arrangements trustees provide to members’.
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