Welcome to the weekly KHQ Super Alert. This week ASIC launched a consultation which proposes additional relief in relation to the reportable situations regime and a Senate Committee published the third interim report on the enquiry into Australia’s retirement system.
Treasury – Further materials in relation to proposed portability of superannuation with Cook Islands
On 20 February 2025, Treasury released the finalised version of the Memorandum of Understanding (MOU) with the Cook Islands relating to the portability of superannuation benefits between the two countries. As referred to in our Super Alert of 15 November 2024, the MOU was signed late last year and sets out the commitment between the two governments ‘to set up superannuation portability between the 2 countries…[which] will allow affected residents to transfer accumulated retirement savings between each country following permanent migration’.
Click here for details.
APRA – Cloud computing information paper removed
On 19 February 2025, APRA issued a media release announcing that it has rescinded its 2018 information paper called ‘Outsourcing involving cloud computing services’. The reason is because CPS 230 Operational Risk Management which comes into effect on 1 July 2025 ‘includes formal supervisory coverage for entities with cloud service provider arrangements’, so these additional expectations are not required.
Click here for details.
ASIC – Consultation on additional breach reporting relief
On 18 February 2025, ASIC launched a consultation on proposed ‘additional relief under the reportable situations regime’. There are four separate reportable situations including breaches which are automatically ‘deemed’ to be significant and therefore reportable.
ASIC is proposing that deemed breaches would not need to be reported to it when:
- ‘the breach has been rectified within 30 days from when it first occurred’;
- ‘the number of impacted consumers does not exceed five’;
- ‘the total financial loss or damage to all impacted consumers resulting from the breach does not exceed $500’; and
- ‘the breach is not a contravention of the client money reporting rules and clearing and settlement rules’.
ASIC explained that the purpose of the proposed relief is to ‘strike a balance between reducing the reporting burden on licensees, while upholding the objectives of the reportable situations regime’. However, it noted that while these breaches may not be considered deemed breaches, they may still be reportable under another limb of the reportable situations (such as under the general significance test).
The consultation will end on 11 March 2025.
Click here for details.
Parliament – Report on the enquiry into Australia’s retirement system
On 13 February 2025, the Senate Economics References Committee published its third interim report in its ongoing enquiry into ‘improving consumer experiences, choice, and outcomes in Australia’s retirement system’. This report focuses on superannuation fund governance arrangements. See our Super Alert of 17 May 2024 for the first interim report. The second interim report related to whether a mortgage offset product could be designed for individuals to rollover their superannuation into a bank account.
The seven recommendations made by the Committee are that:
- ‘a requirement be introduced for superannuation trustee boards to have a majority of independent directors, and an independent Chair’;
- ‘director competency rules be introduced, which would mandate, at a minimum, relevant experience requirements that would apply to the chair of a superannuation trustee board’;
- ‘superannuation funds be required to maintain and make public a skills matrix for the purposes of conducting the Fit and Proper process for the appointment of directors’;
- APRA ‘be empowered with an adjudicable pathway to remove a trustee where an assessment is made that a material conflict of interest exists’;
- ‘the government introduce new mandatory reporting requirements on [APRA] to report on Best Financial Interest Duty (BFID) decisions of super funds, to align with existing APRA standards’;
- ‘the government introduce legislation which would require all superannuation funds to maintain adequate funding, raised by the shareholders separate from members’ assets, to meet the various costs to which they may be liable, including fines for trustee misconduct and compensation payments resulting from misadministration’; and
- ‘the government work in an expedient fashion to develop mandatory insurance service standards for superannuation funds’.
Dissenting views were also included from some Senators who believed that the recommendations would either be ineffective or harmful to the industry superannuation sector.
Click here for details.
Parliament – Report on wholesale investor/client test
In February 2025, the Parliamentary Joint Committee on Corporations and Financial Services released its report, following its inquiry which commenced on 20 March 2024 into the wholesale investor test for offers of securities (under section 708 of Chapter 6D of the Corporations Act 2001) and the wholesale client test for financial products and services (under sections 761G and 761GA of Chapter 7 of the Act) (referred to collectively as ‘the wholesale investor/client tests’).
As explained by the report, ‘in relation to managed investment schemes (MIS), the wholesale client and investor tests use wealth and product-value thresholds to determine whether a client or investor is able to participate in registered (retail) MIS, which are subject to a range of prescribed consumer protections under chapter 5C of the Corporations Act, or unregistered (wholesale) MIS, which are not subject to the same protections.’
After a process of receiving public submissions, a 73-page report has been published which contains 2 recommendations:
- Recommendation 1: ‘That the government consider establishing a mechanism for periodic review of the operation of the wholesale investor and client tests; and that any such mechanism include mandatory requirements for engagement and consultation with Australia’s investment industry.’
- Recommendation 2: ‘That, subject to a period of stakeholder consultation, the government amend the Corporations Act 2001 to remove the subjective elements of the sophisticated investor test and introduce objective criteria relating to the knowledge and experience of the investor.’
Click here and here for details.
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