Welcome to the latest issue of the KHQ Super Alert. This week ASIC released a report setting out its concerns about the performance of choice investment options and APRA released its proposed amendments to the ORFR standards.
ASIC – Report released relating to performance of choice products
On 21 February 2024, ASIC issued a media release announcing that it had released Report 779 titled ‘Superannuation and choice products: What focus is there on performance?’. According to ASIC, Report 779 ‘examines the role of superannuation trustees, financial advisers and Australian financial services licensees in influencing the investment options that make up member superannuation portfolios as part of a choice superannuation product’.
ASIC has explained that its review was ‘concerning’ as it ‘found that often there was insufficient emphasis on and a lack of transparency about Choice investment options that failed to meet performance expectations. There was little evidence of trustees communicating to members about investment option performance in a targeted manner’. ASIC is now ‘considering a range of regulatory responses where there was an indication clients were at risk of detriment as a result of personal advice’.
Click here for details.
Supreme Court Victoria – Dismissal of long running benefit payment dispute
On 20 February 2024, the Court of Appeal of the Supreme Court of Victoria released its judgement in McAtamney v Australia And New Zealand Banking Group Ltd [2024] VSCA 8. The decision is the latest in long running proceedings which included Superannuation Complaints Tribunal determinations in 2009 and 2016, Federal Court decisions in 2016 and 2021 and a County Court summary dismissal in 2023. The key issue relates to benefit payments made to the plaintiff in 2007. A common theme in the proceedings has involved identifying the correct trustee of the relevant superannuation fund.
As part of this decision, the Court was required to consider whether the plaintiff could make an application for leave to appeal the County Court decision, despite it being out of time. The Court ultimately determined to refuse both the application for an extension of time as well as the application for leave to appeal as it considered that the proceedings had no real prospect of success and the plaintiff did not have ‘any viable cause of action’.
Click here for details.
APRA – Draft amendments to SPS 114 (ORFR) proposed
On 19 February 2024, APRA issued a letter to all superannuation trustees relating to changes proposed to the operational risk financial requirement (ORFR) prudential standard and guidance. Draft versions of SPS 114 and SPG 114 have been released for comment.
According to APRA, the changes will:
- ‘clarify the purpose of the ORFR’;
- ‘introduce a clear and direct relationship with CPS 230’;
- ‘widen the range of uses for the ORFR’; and
- ‘amend the notification requirements to facilitate use of the ORFR’.
The consultation period closes on 13 May 2024. See our Super Alert of 18 November 2022 for more information about the discussion paper which was originally released for these changes.
Click here for details.
Legislation – SPS 450 (ERF transition) revoked
On 15 February 2024, Prudential Standard SPS 450 Eligible Rollover Fund Transition was revoked on the Federal Register of Legislation. According to the Explanatory Statement, given that ‘all monies held in ERFs were transferred to the ATO by 31 January 2022, SPS 450 is now redundant’.
Click here for details.
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