Super Alert – 1 October 2021

Welcome to the latest issue of the KHQ Super Alert which follows a particularly busy week of news. Treasury has released consultations in relation to the new retirement income covenant and the regulations to support the ‘Better Advice’ Bill. APRA provided an update regarding its key priorities for the remainder of 2021 and also released for consultation its proposed revisions to SPS 530 Insurance Governance.

KHQ Lawyers - Super Alert

Legislation – ASIC Corporations, Credit and Superannuation (Amendment) Instrument 2021/753 registered

On 29 September 2021, the ASIC Corporations, Credit and Superannuation (Amendment) Instrument 2021/753 (Instrument) was registered on the Federal Register of Legislation. The Instrument ’incorporates an updated version of Regulatory Guide 271’ into the ASIC Corporations, Credit and Superannuation (Internal Dispute Resolution) Instrument 2020/98, to reflect the fact that it was republished on 2 September 2021. It also removes the enforceability of four paragraphs of RG 271, as they are already enforceable under other legislative requirements.

Click here for details.

Treasury – Consultation in relation to regulations supporting the Better Advice Bill

On 29 September 2021, Treasury released for public consultation two sets of draft regulations and a draft legislative instrument supporting the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 (Cth) (Better Advice Bill). The Government is seeking ‘stakeholder feedback on the exposure draft regulations and legislative instrument which implements key elements to support the operation of the Better Advice Bill. These include:

  • setting the criteria for when ASIC must refer matters to the single disciplinary body;
  • specifying the administrative sanctions made against a financial adviser that must be included on the Financial Advisers Register;
  • extending the deadline to complete the financial adviser exam to 30 September 2022 for financial advisers who have attempted the exam twice before 31 December 2021;
  • proposing new fees for the financial adviser exam and registration of financial advisers from 1 January 2022; and
  • outlining the registration, education and training requirements for financial advisers providing tax (financial) advice services’.

The consultation period ends on 15 October 2021.

Click here for details.

APRA – Consultation in relation to proposed revisions to SPS 530 Insurance Governance

On 29 September 2021, APRA released for public consultation its proposed revisions to Prudential Standard SPS 530 Investment Governance.  According to APRA, ‘[the] updates focus on enhancements to stress testing, valuation and liquidity management practices’.

The consultation period ends on 16 February 2022.

Click here for details.

Treasury – Consultation in relation to the new retirement income covenant

On 27 September 2021, Treasury released for public consultation the Treasury Laws Amendment (Measures for a later sitting) Bill 2021: Retirement income covenant. According to Treasury, the proposed ‘retirement income covenant will support retirees to have the confidence to spend their hard-earned savings, while enabling choice and competition in the retirement phase of superannuation’.

The Bill proposes to amend the Superannuation Industry (Supervision) Act 1993 (Cth) (Act) by:

  • inserting the new retirement income covenant into section 52 of the Act which will ‘require trustees to formulate, review regularly and give effect to a retirement income strategy for beneficiaries who are retired or approaching retirement’; and
  • inserting a new section 52AA into the Act, which stipulates the requirements that must be met by trustees when formulating a retirement income strategy in accordance with the retirement income covenant.

The consultation period ends on 15 October 2021.

Click here for details.

AUSTRAC – Latest InBrief Newsletter released

On 27 September 2021, AUSTRAC published the latest edition of its ‘InBrief’ newsletter. The main article relevant to trustees is ‘Catch up on the latest ML/TF risk assessments’.

Click here for details.

Treasury – Consultation on miscellaneous amendments to Treasury portfolio laws

On 24 September 2021, Treasury released for public consultation the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Miscellaneous and Technical Amendments No. 2 and associated regulations. The Bill and associated regulations propose to:

  • amend the Corporations Act 2001 (Cth) to:
    • ‘expand the group of authorised representatives who can appoint individual persons to act on [a] licensee’s behalf’;
    • require ‘that in time critical cases, [advice] providers have five business days (rather than five calendar days) to give [a] Statement of Advice to clients’;
    • amend the cooling-off rules in section 1019B to provides that the right of return ‘commences no later than the end of five business days (rather than five calendar days) after the product was issued’;
  • amend the Corporations Regulations 2001 (Cth) to provide that the following periodic statements do not need to include a statement of long-term investment returns (to reflect ASIC Class Order 10/630):
    • ‘superannuation products that are non-investment or accumulation life insurance policies offered through the regulated superannuation fund’;
    • ‘superannuation products that have no investment component’; and
    • exit statements; and
  • make various amendments to the Payment Times Reporting Act 2020 (Cth) in relation to the content of payment times reports.

The consultation period ends on 19 October 2021.

Click here for details.

APRA – Update on APRA’s policy priorities

On 24 September 2021, APRA published a letter updating industry in relation to how it has ‘reprioritised the policy agenda for the remainder of the year’. Most relevantly for trustees, APRA has indicated that a key priority during the fourth quarter of 2021 will be ‘updating superannuation standards for [insurance] in super and [investment] governance, ahead of a more comprehensive review of other key standards next year to ensure a sharper focus on the best financial interests duty’.

Click here for details.

ATO – Bundle of guidance material released

On 23 September 2021, the ATO released three separate guidance materials for APRA-regulated funds. These were:

  • ‘Member Account Transaction Service (MATS) reporting with tips for ensuring successful cancellations via your MATS SBR service’;
  • ‘Reminding funds of unclaimed super money and lost member reporting and payment obligations’; and
  • ‘What happens to our super when we die?’

Click here, here and here for details.

ASIC – Guidance on the prohibition of hawking financial products

On 23 September 2021, ASIC released RG 38 which sets out ASIC’s ‘updated guidance on the prohibition of hawking financial products’. The anti-hawking regime is ‘designed to tackle consumer harms arising from consumers being approached with unwanted products’ and according to ASIC, ‘[the] guidance provides further clarity to industry on how they can comply with the regime and how the reforms affect commercial practices’.

The guidance also provides examples and guidance in relation to trustee conduct that does, or does not, amount to hawking. For example, a trustee ‘will not breach the hawking prohibition where they contact an employer to discuss the employer’s choice of default fund for employees who do not nominate a fund to receive payments’.

Click here for details.

ATO – Legal Professional Privilege Protocol

On 22 September 2021, the ATO released its draft legal professional privilege protocol for consultation. The ‘Protocol contains the ATO’s recommended approach for identifying communications covered by LPP and making LPP claims to the ATO’. While ‘it is voluntary to follow the recommended approach’, the ATO notes that when the Protocol is followed, it usually has all the information it requires ‘to be able to make a decision on what to do next’.

The consultation period closes on 31 October 2021.

Click here for details

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