Welcome to the latest issue of the KHQ Super Alert. This week the Federal Court provided guidance about the steps that an AFSL holder should take in supervising its authorised representatives. ASIC also announced that it has issued an infringement notice to another entity for greenwashing.
Federal Court – Conflicted remuneration of authorised representatives
On 29 February 2024, the Federal Court handed down its decision in Australian Securities and Investments Commission v R M Capital Pty Ltd [2024] FCA 151. The key issue considered in the case was whether an AFSL holder took reasonable steps to ensure that its authorised representative did not receive conflicted remuneration. ASIC alleged that the AFSL holder should have had certain policies and procedures in place and should have provided training for its representatives about conflicted remuneration.
The Court ultimately determined (in a lengthy judgment) that the steps taken by the AFSL holder ‘to ensure that its authorised representatives did not accept conflicted remuneration fell short of the reasonable steps that s 963F of the Corporations Act required of a financial services licensee’.
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ASIC – Infringement notice issued for greenwashing
On 29 February 2024, ASIC announced that it has issued another infringement notice relating to greenwashing statements. Although not related to a superannuation trustee, the media release is helpful to explain what ASIC’s greenwashing concerns are. In this case, the disclosures that were made in a PDS were that investments in fossil fuels would be avoided. However, ASIC determined that the fund ‘used revenue thresholds which allowed it to invest in companies that derived up to 33% revenue from excluded activities, such as fossil fuels’. ASIC considered that ‘applying a negative screening process which allows a company to derive up to 33% of its revenue from an excluded activity is not seeking to avoid investments in those activities’, and therefore this PDS disclosure was misleading.
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APRA – Quarterly superannuation statistics
On 27 February 2024, APRA released the superannuation statistics for the quarter ending 31 December 2023. According to APRA, total superannuation assets reached $3.69 trillion which is a 10% increase compared to this same period in 2022.
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Government – CSLR to commence operations soon
On 26 February 2024, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, issued a media release announcing that the Compensation Scheme of Last Resort (CSLR) will commence operations from 2 April 2024. See our Super Alert of 2 February 2024 which refers to the legislation that was registered to give effect to the launch of the CSLR.
The media release explains that compensation ‘of up to $150,000 [will be provided] to eligible consumers who have an unpaid determination from the Australian Financial Complaints Authority (AFCA) relating to the provision of personal financial advice, credit intermediation, securities dealing and credit provision’.
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