Welcome to the latest issue of the KHQ Super Alert. This week the Federal Court delivered a greenwashing-related judgement against a superannuation trustee and APRA expressed its concerns in relation to the use of data back-ups. Parliament also passed two Bills relating to expanding the jurisdiction of the Federal Court and introducing a new Anti-Slavery Commissioner.
Federal Court – Greenwashing judgment against trustee
On 5 June 2024, the Federal Court delivered its judgment in Australian Securities and Investments Commission v LGSS Pty Ltd [2024] FCA 587. This proceeding relates to one of the several greenwashing actions that ASIC has commenced against superannuation trustees. In this case, ASIC alleged that the relevant trustee had made false or misleading representations in relation to various statements on its website, social media and disclosure documents relating to how certain investments in gambling companies, oil, coal mining, Russian assets and tobacco were excluded.
The Federal Court found that some of these representations were misleading and deceptive. The Court found that the trustee made ‘emphatic statements’ about its sustainable investments and did not explain that they may be subject to qualifications or limitations.
His Honour was also critical of the use of concise statements in the hearing rather than ‘conventional pleadings’ as ‘[j]udges of this court have repeatedly pointed to the unsatisfactory nature of concise statements in cases of complexity, or where multiple representations are said to have been conveyed in myriad places’.
There will be a separate hearing to determine any ‘pecuniary penalties, adverse publicity orders and injunctive relief’.
Click here for details.
APRA – Speech in relation to current supervisory focus
On 4 June 2024, APRA published the opening statement made by its Chair, John Lonsdale, to the Senate Economics Legislation Committee. In relation to the superannuation industry, Mr Lonsdale made the following comments:
- APRA is ‘further progressing work to improve transparency and to ensure that trustees are always acting in the best interests of fund members’;
- ‘APRA will publish the results of the 2024 annual performance test in late August…[s]hortly afterwards, APRA will publish a detailed package of performance metrics, investment returns, and fees, to provide further transparency to super product performance. In addition, APRA will soon begin publishing new and more granular data on how members’ funds are being spent and invested by trustees’; and
- ‘APRA will launch a pilot version of [the] new digital Prudential Handbook later this month, which organises more than 140 Prudential Standards, Guidance and associated information into an easy-to-use and search format’.
Click here for details.
APRA – Concerns in relation to use of data backups
On 3 June 2024, APRA issued a letter to all regulated entities relating to the ‘security and adequacy of backups’. APRA has explained that as part of its cyber resilience reviews, ‘[a] key topic where APRA has observed weakness is the use of data backups to protect an entity against data loss’. A summary of common issues has been included with APRA’s letter and this includes insufficient testing of the systems.
APRA has advised that it ‘expects regulated entities to review their backup arrangements against these common issues. If the review identifies gaps that could materially impact the entity’s risk profile or financial soundness, APRA considers this a material security control weakness notifiable under paragraph 36 of CPS 234’.
Click here for details.
Parliament – Legislation in relation to Payment Times Reporting Scheme
On 29 May 2024, the Payment Times Reporting Amendment Bill 2024 was introduced to the House of Representatives. The purpose of the Bill is to amend the Payment Times Reporting Act 2020 (Cth) in order ‘to implement the Government’s response to the Statutory Review of the Act, improve the operation of the Scheme and to better achieve its objectives’. As referred to in our Super Alert of 19 April 2024, Treasury released the draft version of this legislation for public consultation earlier this year.
Click here for details.
Parliament – Attorney-General’s miscellaneous measures Bill passed
On 28 May 2024, the Attorney-General’s Portfolio Miscellaneous Measures Bill 2023 was passed by both Houses of Parliament. The Bill has been before Parliament since 15 November 2023. As referred to in our Super Alert of 24 November 2023, the purpose of the Bill is to (among other things) ‘confer jurisdiction on the Federal Court of Australia … to hear and determine a range of summary and indictable offences relating to conduct within the regulatory remit of [ASIC].’
Click here for details.
Parliament – Bill introducing new Anti-Slavery Commissioner passed
On 28 May 2024, the Modern Slavery Amendment (Australian Anti-Slavery Commissioner) Bill 2023 was passed by both Houses of Parliament. The purpose of the Bill is to (amongst other things) ‘establish the Australian Anti-Slavery Commissioner as an independent statutory office holder within the Attorney-General’s portfolio to provide an independent mechanism for victims and survivors, business and civil society to engage on issues and strategies to address modern slavery’.
Click here for details.
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