Welcome to the latest issue of the KHQ Super Alert. It has been a quieter week, but with some important developments. Treasury released the Quality of Advice Review report, the Senate disallowed the annual members’ meeting notice amending regulations, and the ATO announced that the transfer balance cap is to be indexed.
Parliament – Annual Members’ Meeting Notices Regulations disallowed
On 9 February 2023, the Superannuation Industry (Supervision) Amendment (Annual Members’ Meetings Notices) Regulations 2022 (Amending Regulations) were in the spotlight again as the Senate voted on the two remaining disallowance motions which were brought in November 2022.
The Amending Regulations, which amend some of the disclosure requirements in annual members’ meeting notices relating to expenditure, have had a short but tumultuous tenure which will come to an end as a Senate majority voted they be disallowed. The Amending Regulations are now no longer in force and the disclosure requirements for annual members’ meetings will revert to what they were before the Amending Regulations were passed.
See our 2 December 2022 Super Alert for more information on the Amending Regulations.
Click here and here for details.
Treasury – Final report in the Quality of Advice review was released
On 8 February 2023, Treasury released the Final Report in the Quality of Advice Review conducted by Ms Michelle Levy. The 267-page report includes 22 recommendations for ‘changes to the regulatory framework’ that applies to the provision of financial advice.
Most relevantly for the superannuation industry, these recommendations include:
- broadening the definition of ‘personal advice’ in the Corporations Act 2001 (Cth) (Corporations Act);
- removing the requirement for a general advice warning;
- retail clients being provided with ‘good advice’ (good advice duty);
- the existing best interests duty and related obligations (the duty to give appropriate advice assuming the best interests duty is satisfied, the duty to warn the client if the advice is based on inadequate or insufficient information and the duty of priority if there is a conflict) being replaced with a statutory best interests duty applicable only to financial advisers which will not include a safe harbour;
- superannuation fund trustees being ‘able to provide personal advice to their members about their interests in the fund’ and ‘restrictions on collective charging of fees’ being removed;
- the requirement to provide a statement of advice being replaced with the requirement to maintain complete records of the advice required and provide written advice on request by the client; and
- the Design and Distribution Obligations (DDO) reporting requirements in the Corporations Act being amended to remove certain requirements and all providers of personal advice should be required to report the number (including a description) of complaints received in a reporting period.
The Government is considering its response and which (if any) of the recommendations will be adopted.
Click here for details.
ATO – Transfer balance cap to be indexed
On 8 February 2023, the ATO announced that the transfer balance cap will be indexed on 1 July 2023, increasing to $1.9 million. The transfer balance cap limits the amount that can be transferred into the retirement phase of superannuation. Also, he defined benefit income cap is set to increase to $118,750.
Click here for details.
Treasury – Consultation begins on payment times reporting review
On 3 February 2023, Treasury released a consultation paper in connection with the Statutory Review of the Payment Times Reporting Act 2020 (Cth) which was announced on 6 December 2022. As mentioned in our 9 December 2022 Super Alert, broadly, the independent review is to consider whether the legislation is meeting its objectives and whether related policies ‘have improved payment terms and performance of reporting entities in relation to their small business suppliers’.
Consultation will close on 1 March 2023.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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