Welcome to the first issue of the KHQ Super Alert for 2025. We look forward to bringing you the latest superannuation industry news again every week this year. As always, please let us know if any new colleagues have joined your team and would like to subscribe to these updates.
January has been a busy month with many consultations commenced for proposed reforms, such as the Government’s proposed mandatory service standards for superannuation funds. In addition, ASIC has requested all superannuation trustees to uplift their anti-scam practices, and APRA has released the latest expenditure data for the industry.
ASIC – Request to superannuation industry to increase anti-scam practices
On 30 January 2025, ASIC released a letter it had sent to all superannuation trustees in relation to their scam and fraud practices. According to the media release ‘an ASIC review of 15 superannuation trustees…found none had an organisation-wide scams strategy in place.’
ASIC outlined its observations about trustees’ approach to scams and fraud and requested that all trustees:
- ‘conduct a preliminary assessment of your anti-scam and anti-fraud measures—including for services provided by external administrators—to identify any areas for improvement
- read REP 761 [Scam prevention, detection and response by the four major banks…and REP 790 [Anti-scam practices of banks outside the four major banks]…and address the baseline measures that we have set out, in addition to the areas of risk and weakness identified in this letter
- consider whether it is appropriate to allocate the scam (and fraud) management key function to one of your accountable persons as you prepare for the incoming Financial Accountability Regime, and
- leverage industry bodies and bilateral relationships to share information and promote improvements across the industry’.
Click here for details.
APRA – Further superannuation expenditure data released
On 30 January 2025, APRA published its second set of data relating to industry expenditure, which now includes detailed ‘fund-level insurance information, covering claims, coverage, premiums, and member engagement metrics’. Total industry expenditure for the 2023/24 financial year was $12.7 billion which, according to APRA, was an increase of 15% compared to the 2022/23 financial year.
Click here for details.
APRA – Speech in relation to governance in superannuation
On 30 January 2025, APRA published a speech delivered by its Deputy Chair, Margaret Cole. The focus of Ms Cole’s speech was governance as ‘APRA is undertaking a review of the core governance prudential standards across banking, insurance and superannuation…[which] include the core superannuation standard Governance SPS 510 and the supporting standard Fit and Proper SPS 520’.
Ms Cole identified the ‘three broad areas’ where ‘instances of poor governance practices tend to occur’ as being:
- where APRA has ‘material prudential concerns regarding an entity’s operational risk and risk culture, [and] a lack of good governance is often the root cause’;
- a ‘lack of robustness in board governance processes, including in relation to the nomination and appointment of directors…[which] manifests itself in the inconsistent use of board skills matrices and performance reviews’; and
- ‘the persistence of poor governance in processes such as board renewal and tenure’.
Click here for details.
Government – Mandatory service standards proposed for the superannuation industry
On 28 January 2025, the Hon Jim Chalmers MP, Treasurer, and the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, issued a joint media release announcing the Government’s plan to introduce ‘mandatory and enforceable service standards for all large APRA‑regulated superannuation funds’. The release explains that the ‘critical areas’ targeted by the new standards will include:
- ‘The timely and compassionate handling of death benefits’;
- ‘Fair and efficient processing of insurance claims’; and
- ‘Clear, respectful and accessible communications with members’.
The release also clarifies that the reform ‘aligns with the newly legislated objective of superannuation: “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”’. A draft version of the standards will be released for consultation. It is not yet clear what form the standards will take (for example, whether a legislative instrument or not).
Click here for details.
ASIC – Focus areas for 2025
On 24 January 2025, ASIC published its key areas of focus for the year which identify ‘the most significant current, ongoing and emerging issues within its regulatory remit in 2025’. The issues identified by ASIC include:
- ‘Superannuation members being let down by their fund and trustee’: ASIC highlighted that ‘[b]etween 2021 and 2023, complaints to the Australian Financial Complaints Authority about superannuation funds’ service provision … doubled’ and clarified that ‘[it] will not hesitate to take enforcement action where appropriate’;
- ‘Unsuitable superannuation advice resulting in adverse consumer outcomes’: ASIC identified ‘considerable volumes of superannuation fund inflows into high-risk investments’ and anticipated that ‘[it] will take enforcement action where we see misconduct exploiting superannuation savings’; and
- ‘Poor quality climate-related financial disclosures leading to misinformed investment decisions’, with ASIC reminding ‘reporting entities’ that they ‘will need to ensure they have appropriate governance and reporting processes in place to provide greater transparency to Australians and investors about their climate-related risks and opportunities’.
Click here for details.
Treasury – Proposed creation of a new body combining the functions of the AASB, AUASB and FRC
On 23 January 2025, Treasury released a consultation paper which seeks ‘feedback on the proposed structure and governance arrangements for a new body responsible for the combined functions of the Australian Accounting Standards Board (AASB), the Auditing and Assurance Standards Board (AUASB) and the Financial Reporting Council (FRC)’.
In a related joint media release issued by the Hon Jim Chalmers MP, Treasurer and the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, they explained that ‘[a] key focus of the proposed new architecture is ensuring the new body will have the flexibility to meet evolving priorities and issues’ and will aim to ‘provide a one stop shop for the development and issuance of standards…increase regulatory consistency, reduce unnecessary costs and avoid duplication when it comes to financial reporting’.
The consultation period will end on 21 February 2025.
Click here and here for details.
ATO – SuperMatch annual statements due by 28 February 2025
On 22 January 2025, the ATO reminded all funds using SuperMatch that annual statements of compliance will be due by 28 February 2025. The ATO clarified that the statements will need to confirm that:
- ‘there were no changes in solution or usage of SuperMatch, or that any changes to your SuperMatch processes have been reported to us’;
- ‘you are actively monitoring your use of SuperMatch, with any concerns in usage reported to us’; and
- ‘the SuperMatch solution and usage complies with the terms and conditions of use, and the user guide, with any breaches reported to us within the required timeframes’.
Click here for details.
APRA – APRA and ASIC release notes on Superannuation CEO Roundtables
On 20 January 2025, APRA released its ‘notes on the Superannuation CEO Roundtables held on Monday 25 November and Thursday 5 December 2024’, ‘which were attended by 14 superannuation Chief Executive Officers and other executives (CEOs) representing a broad cross-section of the industry’. According to the notes, the Roundtables highlighted that ‘[c]limate risk is a key focus for APRA and ASIC, given the potential impact on financial stability and the sustainability of superannuation funds’, as confirmed by the ‘recent legislation mandating climate-related financial disclosures, and the introduction of the Australian Sustainability Reporting Standards (ASRS)’.
Concerns were expressed by the CEOs around ‘the complexity and cost of mandatory reporting, while also recognising the benefits of voluntary disclosure’, however APRA, ASIC, and the CEOs were all in agreement that industry bodies all play a ‘crucial role’ ‘in supporting trustees and ensuring consistent and effective climate risk disclosure and reporting’. APRA and ASIC stated that ‘[they] are committed to supporting the superannuation industry in managing climate and nature risks through clear guidance, practical support, and collaboration with industry bodies’.
Click here for details.
Treasury – Consultation on miscellaneous amendments to Treasury laws
On 20 January 2025, Treasury commenced a consultation process in relation to an exposure draft Bill, exposure draft regulations and an exposure draft instrument which propose to make ‘miscellaneous amendments to Treasury Portfolio Laws’. In relation to superannuation, some minor amendments are proposed to the Corporations Act 2001 (Cth) in relation to ASIC’s powers to grant relief in relation to the upcoming sustainability report requirements.
Amendments are also proposed to the SIS Regulations to address the repeal of the former Disability Services Act 1986 (Cth). The other instruments propose minor amendments to clarify legislative references, correct errors and improve readability.
The consultation period is short and closes today.
Click here for details.
ATO – Consultation on draft Practical Compliance Guideline
On 15 January 2025, the ATO launched a consultation in relation to a new proposed Practical Compliance Guideline called 2025/D1 Fees for personal financial advice paid from member accounts by superannuation funds – apportioning the deduction and pay as you go withholding obligations. The purpose of the guideline is to address ‘recent amendments made to the Income Tax Assessment Act 1997 (ITAA 1997)’ and set out a ‘methodology superannuation funds can use to determine the extent to which payments of financial advice fees satisfy paragraph (d) of table item 5 of subsection 295-490(1) of the ITAA 1997’. It also proposes to explain the ATO’s ‘compliance approach in relation to a superannuation fund’s obligation to withhold from these payments for personal financial advice fees in the income years prior to 1 July 2019’.
The consultation period closes on 14 February 2025.
Click here for details.
Legislation – New APRA reporting standards registered
On 7 January 2025, the Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2025 (relating to Reporting Standard SRS 332.0 Expenses and Investment and Transaction Fees and Costs) and Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2025 (relating to Reporting Standard SRS 340.0 RSE Licensee Financial Statements) were registered on the Federal Register of Legislation.
SRS 332.0 ‘sets out requirements for the provision of information to APRA relating to expense reporting and investment and transaction fees and costs disclosure of each registrable superannuation entity, defined benefit registrable superannuation entity and pooled superannuation trust’, while SRS 340.0 ‘sets out requirements for the provision of information to APRA relating to the audited financial statements and reports of an RSE licensee’.
Click here and here for details.
Treasury – Consultation on new tax regulator secrecy exceptions
On 20 December 2024, Treasury launched a consultation relating to the ‘[s]ecrecy provisions [which] apply to the Australian Taxation Office (ATO) and Tax Practitioners Board (TPB)…[and the] exceptions where the ATO or TPB can reveal protected tax information’. The purpose of the consultation is to:
- consider ‘more situations where disclosure is appropriate’; and
- seek ‘feedback on proposed new exceptions’.
In an associated media release, the assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, clarified that ‘[i]mmediately following the PwC tax scandal, the Government removed limitations in the tax secrecy laws that prevented the ATO from providing information to Treasury about PwC’s misuse of the department’s confidential information. This consultation paper will explore whether there are any additional instances where it may be appropriate for the ATO or TPB to disclose protected tax information in the public interest’.
The consultation period closes on 28 February 2025.
Click here and here for details.
Department of Home Affairs – Consultation on rules to the Cyber Security Act and Security of Critical Infrastructure Act
On 16 December 2024, the Minister for Home Affairs launched a consultation on the ‘subordinate legislation’ required to implement the Government’s ‘Cyber Security Legislative Package’ following the Cyber Security Act 2024, Intelligence Services and Other Legislation Amendment (Cyber Security) Act 2024, Security of Critical Infrastructure and Other Legislation Amendment (Enhanced Response and Prevention) Act 2024 receiving Royal Assent. See our Super Alert of 29 November 2024 for further background about these reforms.
The consultation seeks feedback on six “Proposed Rules”, including:
- Cyber Security (Security Standards for Smart Devices) Rules 2024, which seek to ‘provide mandatory security standards for products that can directly or indirectly connect to the internet’;
- Cyber Security (Ransomware Reporting) Rules 2024, to clarify circumstances in which an entity must provide ‘a ransomware payment report’ and the information to be included in such report;
- Cyber Security (Cyber Incident Review Board) Rules 2024, providing for ‘procedures for reviews, appointments of standing members and Expert Panel members, and the procedures of the [Cyber Incident Review] Board’.
The consultation period closes on 14 February 2025.
Click here for details.
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