Welcome to the latest issue of the KHQ Super Alert. This week, ASIC released more insights from the reportable situations regime and APRA released a speech outlining the priorities for superannuation trustees over the coming year.
Treasury – Consultation in relation to Australia’s sustainable finance strategy
On 2 November 2023, Treasury released Australia’s Sustainable Finance Strategy for consultation. The strategy is structured in three pillars:
- Pillar 1: Improve transparency on climate and sustainability;
- Pillar 2: Financial System capabilities; and
- Pillar 3: Australian Government leadership and engagement.
A few priorities of interest in Pillar 1 include to establish ‘a framework for sustainability-related financial disclosures’, develop ‘a Sustainable Finance Taxonomy’, and develop ‘a labelling system for investment products marketed as sustainable’.
In an associated media release issued on the same day by the Treasurer, the Hon Dr Jim Chalmers MP, he stated that the consultation paper ‘proposes a wide range of tools and policies and builds on substantial work already underway, including the introduction of standardised, internationally‑aligned mandatory climate disclosure requirements and [the Government’s] sovereign green bond program’.
Consultation will close on 1 December 2023.
Click here and here for details.
AUSTRAC – Guidance in relation to data breaches and AML/CTF obligations
On 2 November 2023, AUSTRAC issued a media release relating to guidance released in October which aims to help reporting entities understand their AML/CTF obligations in relation to data breaches and protect their business and customers from the heightened risks that can arise from data breaches.
According to the media release, the guidance highlights the importance of:
- ‘reviewing your risk assessment and systems and controls to make sure they reflect the ML/TF risks arising from a data breach’;
- ‘identifying, mitigating and managing your ongoing customer risks, paying particular attention to potential indicators for identity crime, fraud and cyber-enabled crime’; and
- ‘reporting any data breach appropriately’.
Click here and here for details.
Legislation – Regulations registered to implement minor ALRC recommendations
On 31 October 2023, the Treasury Laws Amendment (ALRC Financial Services Interim Report) Regulations 2023 were registered on the Federal Register of Legislation. These regulations make further consequential changes to laws such as the Corporations Regulations 2001 (Cth), which are required as a result of the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 including:
- ‘expanding section 9 of the Corporations Act to create a single glossary’; and
- ‘removing redundant definitions’.
In addition to the consequential amendments, the Explanatory Memorandum states that ‘the Regulations make other improvements to simplify the Corporations Regulations relating to the use of definitions. These include clarifying the meaning of defined terms, using consistent headings for definitions sections and other minor amendments to improve navigability and make the Corporations Regulations easier to read’.
See further detail on the background in our Super Alert of 8 September 2023 which explains that these laws implement minor recommendations identified by the Australian Law Reform Commissions as part of its broad review of the legislative framework for corporations and financial services regulation.
Click here for details.
Treasury – Speech in relation to improving retirement advice for members
On 31 October 2023, Treasury released a speech given by the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP. The speech touched on legislating the objective of superannuation, superannuation performance, and the need to improve customer service in the superannuation industry.
The speech noted that ‘[w]ith five million Australians either retiring or approaching retirement’, funds need to urgently improve the quality and availability of ‘advice and information around retirement incomes’ to close the ‘biggest gap in the advice market’.
Click here for details.
ASIC – Insights from the reportable situations regime
On 31 October 2023, ASIC released Report 775 Insights from the reportable situations regime: July 2022 to June 2023 (Report 775). In the associated media release, ASIC reported that the areas of concern highlighted in the previous publication (Report 740, see our Super Alert from 28 October 2022) remain areas of concern in this publication.
These areas of concern are:
- ‘the proportion of the licensee population reporting remains very low, indicating that some licensees may not be complying with the regime’;
- ‘licensees are still taking too long to identify and investigate some breaches’;
- ‘a significant number of remediation activities are still taking too long to complete’; and
- ‘there remain opportunities to improve identification and reporting root causes of breaches’.
ASIC Chair Joseph Longo commented that ‘ASIC will now move to taking stronger regulatory action to drive improved compliance with the regime, including enforcement action where appropriate’.
Click here and here for details.
APRA – Speech in relation to priorities for superannuation trustees
On 31 October 2023, APRA published a speech given by Deputy Chair Margaret Cole. In the speech, Ms Cole comments that ‘[f]unds today are fewer and bigger than they were back in 1992’ and that ‘the industry has made significant strides to strengthen governance, improve industry practices, and address performance issues’ in the past decade.
Ms Cole announced that APRA is writing to superannuation trustees ‘to set out a clear forward plan of APRA’s priorities to assist with [each trustee’s] business planning for the next 12 months’.
The priorities identified include:
- ‘[g]rowing resilience and addressing system-wide risks’ (including ‘operational resilience encompassing cyber security and preparedness to manage cyber incidents’);
- ‘[d]riving greater accountability’ (Ms Cole commented on the impact the Financial Accountability Regime will have by holding directors and senior executives to account);
- ‘[b]etter member outcomes through transparency’ (Ms Cole commented on APRA’s collection and publication of data as a means to improve member outcomes); and
- ‘improving retirement outcomes and customer experience’ through ‘understanding member needs’, ‘designing fit-for-purpose assistance’, and ‘overseeing strategy implementation’.
Click here for details.
Supreme Court of Victoria – Judgement in Crimes Act application
On 30 October 2023, the Supreme Court of Victoria handed down its judgement in Re Guild Trustee Services Pty Ltd (in its capacity as trustee for the Guild Retirement Fund) [2023] VSC 629. A retiring trustee applied to the Court seeking its consent (for the purposes of section 180 of the Crimes Act 1958 (Vic)) for both the retiring and receiving trustee ‘soliciting and receiving or offering and giving’ various indemnities as part of a deed of retirement and appointment. Some of these indemnities were to be given by third parties and the parties had also agreed that ‘certain fees be paid for future sponsorship and promotion services’.
The Supreme Court granted to both the retiring and receiving trustee, as well as the other third parties, the consent that was sought as the Court was satisfied that the entry into and performance of the various obligations ‘did not provide any inducement to [the retiring trustee] to act other than in the best interests of the beneficiaries of the Fund’.
Click here for details.
Legislation – Regulations to simplify Corporations Law
On 27 October 2023, the Treasury Laws Amendment (Modernising Business Communications) Regulations 2023 (regulations) were registered on the Federal Register of Legislation. These regulations amend the Corporations Regulations 2001 (Cth) and the Superannuation Industry (Supervision) Regulations 1994 (Cth) (among others) ‘to ensure that certain documents can be sent in either physical or electronic form and amend prescriptive requirements to publish notices in newspapers’.
These regulations make amendments to implement the changes already made by the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 (see our Super Alert from 22 September 2023). These regulations commenced on 28 October 2023, other than the changes to notice publication requirements which will commence on 1 January 2024.
Click here for details.
Treasury – Amendments in relation to defined benefit income stream valuations in SFTs
On 26 October 2023, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Hones MP, issued a media release announcing that the ‘Government is progressing legislative amendments to the transfer balance cap for individuals with a capped defined benefit income stream to ensure members are not adversely impacted in the event of a merger or successor fund transfer between superannuation funds’.
According to the media release, the amendments will apply retrospectively from 1 July 2017. As at the date of this Super Alert, the proposed legislation had not yet been released.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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