Welcome to the latest issue of the KHQ Super Alert. This week, APRA released the results of the 2023 superannuation performance test which included trustee directed products for the first time, and APRA and ASIC released their respective corporate plans.
APRA – Results of the 2023 superannuation performance test
On 31 August 2023, APRA released this year’s results of the annual superannuation performance test for both MySuper products and trustee directed products. This is the first year trustee directed products were evaluated as part of the performance test. Key results include:
- 96 of the 805 trustee directed products tested ‘failed to meet the test benchmarks’;
- 1 of the 64 MySuper products tested failed the performance test for a third time (this product is closed to new members and according to APRA ‘the trustee has plans to cease this product’); and
- 75% of trustee directed products which failed ‘are concentrated in products offered by just four trustees’.
Click here and here for details.
APRA – Corporate plan
On 29 August 2023, APRA released its corporate plan for the 2023/24 financial year. APRA has identified its superannuation-related priorities to be to:
- continue ‘reducing unacceptable product performance’;
- ‘improve member retirement outcomes through targeted supervision of the implementation of the retirement income covenant’;
- ‘[s]implify core superannuation requirements in updates proposed to Prudential Standard SPS 515 Strategic Planning [and] Member Outcomes’; and
- ‘[a]ssess trustee self-assessments against the strengthened Prudential Standard SPS 530 Investment Governance, particularly in respect of the approach taken by trustees to liquidity management, stress testing, and asset valuation’.
APRA has also said that it will continue to:
- ‘[e]nsure that regulated entities are embedding changes to their organisation following risk transformation programs, particularly where an entity has been subject to …[changes to] licence conditions’; and
- ‘[i]mplement the Financial Accountability Regime, in partnership with [ASIC], subject to enabling legislation being passed by the Parliament’.
Click here for details.
ASIC – Corporate plan
On 28 August 2023, ASIC released its corporate plan for the 2023/24 financial year. In a media release issued on the same day, ASIC highlighted its position as a law enforcement agency, noting that in the three years to 30 June 2023, it ‘commenced over 125 criminal actions’ and ‘close to 200 civil actions’.
ASIC’s priorities for the coming year will be of little surprise to many and include:
- product design and distribution (focusing on ‘poor product design, distribution and marketing’);
- sustainable finance (including ‘enforcement of current governance and disclosure standards to reduce harms from greenwashing’);
- retirement outcomes (focusing on ‘superannuation products, managed investments and financial advice’); and
- technology risks (focusing on ‘cyber and operational resilience practices’ and addressing ‘digitally enabled misconduct’).
Click here for details.
Treasury – Modernising Business Registers program cancelled
On 28 August 2023, Assistant Treasurer and Minister for Financial Services announced that the Modernising Business Registers program would not be continuing (see our Super Alerts from 19 March 2021 and 1 April 2021). The final report from an independent review of the program was released by Treasury on the same day.
Click here and here for details.
UNFAIR CONTRACT TERMS – ARE YOU READY?
There’s been much commentary regarding the upcoming changes to the unfair contract terms regime under the Australian Consumer Law and the ASIC Act, brought about by the passing of the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth). These changes have the effect of broadening the scope of the existing UCT laws, and introducing new penalties (in addition to raising the threshold for others) for non-compliance.
These changes will impact AFSL holders, and may also be relevant for other businesses operating in the financial services sector.
We have a prepared a guide to the changes, which you can access here. If you have any questions, or need assistance to ensure that you are compliance ready, please do not hesitate to contact us.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
Want KHQ Super Alerts delivered straight to your inbox each week? Click here to subscribe.
