Welcome to the latest issue of the KHQ Super Alert. This week APRA released several news items relating to its data transformation project, data from the annual performance test and an article about the importance of data management. Treasury also commenced consultation in relation to the use of genetic testing in life insurance.
APRA – Additional data collection proposals
On 30 November 2023, APRA released a discussion paper which sets out its ‘proposed enhancements for the collection of data on investments (including indirect investment costs), registrable superannuation entity (RSE) and RSE licensee profile and RSE licensee financials’. The particular data collection areas that APRA seeks to strengthen include the ‘business model and structure of trustees’, ‘product distribution arrangements between funds and intermediaries’ (such as promoters) and ‘trustees’ financial statements data’.
Consultation closes on 31 March 2024.
Click here for details.
APRA – Speech in relation to APRA priorities
On 30 November 2023, APRA published a speech delivered by its Executive Director of Superannuation, Carmen Beverley-Smith. The speech refers to the transparency changes mentioned in the news item above, as well as APRA’s areas of focus for 2024 which are:
- ‘ensuring sound investment governance practices, particularly in relation to asset valuation and liquidity risk management’;
- ‘uplifting operational resilience including in cyber security and technology’;
- ‘addressing product under-performance’;
- ‘understanding trustee progress in managing climate-related financial risks’;
- ‘embedding recovery, exit and resolution planning’; and
- ‘preparing for implementation of the Financial Accountability Regime in superannuation in 2025’.
Click here for details.
APRA – Insights paper released in relation to data from annual performance test
On 29 November 2023, APRA announced that it has ‘published new data on superannuation product performance, which sheds further light on the industry’s fees and performance metrics’.
An insights paper with detailed information from the annual performance test has been released which, according to APRA, shows that:
- ‘there is significant variance in the administration fees paid by fund members within each of the product segments’;
- ‘larger funds tend to charge lower administration fees, which reinforces the efficiency and cost-savings benefits of scale that exist in superannuation’; and
- ‘while most MySuper products and non-platform trustee directed products are outperforming the investment component of the performance test, more than half of all platform trustee directed products are failing to meet the benchmark’.
In an associated media release, the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, reminded trustees to ‘reflect on these results and implement improvements to demonstrate the value they provide to their members’.
Click here and here for details.
ASIC – Guidance materials released for financial advisers registrations
On 28 November 2023, ASIC released guidance materials to assist financial services licensees with understanding ‘the new requirement for financial advisers to be registered’ as a result of the registration of the Treasury Laws Amendment (2023 Measures No. 1) Act 2023 (Cth).
These materials are:
- Information Sheet 276 FAQs: Registration of Relevant Providers (INFO 276), which according to ASIC ‘provides guidance to AFS licensees and Relevant Providers about registration requirement and process, registrations ceasing and multiple registrations’; and
- Information Sheet 277 Registration of Relevant Providers: Guidance on Making Declarations (INFO 277) which according to ASIC ‘provides guidance to AFS licensees about the declarations they are required to make when applying to register their Relevant Providers’.
Click here for details.
Treasury – Review of regulatory framework for use of genetic testing in life insurance
On 27 November 2023, Treasury released a consultation paper inviting feedback from the public about ‘the impacts of life insurers using genetic test results in underwriting on genetic testing and research’. The paper notes that ‘discrimination in insurance and superannuation products (including life insurance) is permitted…where the discrimination is based on actuarial or statistical data…and the discrimination is reasonable having regard to the data’. As a result, ‘[l]ife insurers are…able to request and use genetic testing results to inform their life insurance underwriting’.
However, according to Treasury ‘there are concerns that [this] is deterring individuals from potentially life-saving genetic testing, as well as from participation in genetic research, for fear that it might impact their ability to obtain affordable life insurance’. Treasury is seeking views about whether regulatory intervention should occur.
The consultation period ends on 31 January 2024.
Click here and here for details.
APRA – Increased focus on data management
On 27 November 2023, APRA issued a media release outlining why it considers that ‘data management must be an ongoing area of focus and monitoring for boards, management, and business’. APRA explains that its recent observations show that ‘progress is slow’ in improving data practices and that ‘the gap between current and better practice in data risk management remains wide’.
APRA has provided the following six key factors ‘for businesses to consider when improving data management’:
- ‘[e]stablish data governance with a unified data strategy’;
- ‘[p]rovide clarity on roles and responsibilities for ownership of critical data elements and processes across the data lifecycle’;
- ‘[s]implify the technology and data architecture environment through improved platform solutions and by decommissioning legacy assets’;
- ‘[i]dentify critical data elements and create a consistent set of data controls’;
- ‘[e]stablish mechanisms to monitor data quality and timely remediation of errors based on business requirements’; and
- ‘[i]ntegrate data management risk into risk management frameworks’.
Click here for details.
APRA – Updated SFT FAQs
On 24 November 2023, APRA released two new frequently asked questions (FAQs) in relation to its Superannuation Data Transformation Project. These questions are:
- SRS 550.0aa: ‘Can APRA provide guidance on whether operational cash should be included when reporting investments under SRF 550.1 table 1?’; and
- SRS 550.0 ab: ‘What does APRA expect to be reported under SRF 550.0 table 2 and SRF 550.1 table 1 where asset allocation classifications for investments are not available as at the reporting date?’.
APRA advised that it also updated:
- ‘the worked example on reporting expenses under SRS 332.0 Expenses including providing an example on Related Party Reporting (Table 4) which is currently being re-issued’; and
- ‘the SRS 550.0 Asset Allocation worked example’.
Click here for details.
AAT – Decision in relation to review of ATO determinations
On 23 November 2023, the Administrative Appeals Tribunal released its decision in Yarahmadi and Commissioner of Taxation (Taxation) [2023] AATA 381. The relevant member had applied to the ATO for a determination that his superannuation be released on compassionate grounds to pay for medical treatment (pursuant to regulation 6.19A of the SIS Regulations). The ATO refused to make the determination due to insufficient evidence.
The member applied to the Tribunal seeking that it review the ATO’s decision. The Tribunal determined that it did not have jurisdiction to review this decision as it was not a ‘reviewable decision’ under the definition of that term in regulation 1.03 of the SIS Regulations.
Click here for details.
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