Welcome to the latest issue of the KHQ Super Alert. This week, ASIC issued an update on its expectations for breach reporting, as well as the results of its surveillance into trustees’ internal dispute resolution practices. Legislation deferring the performance test for trustee-directed products was also registered.
ASIC – Update in relation to breach reporting expectations
On 10 August 2022, ASIC issued a media release in relation to its approach to the implementation of the breach reporting regime. According to ASIC, it ‘will continue to engage with industry on reporting practices adopted by licensees to further understand any issues that are placing [an] unnecessary compliance burden on industry’, as it ‘acknowledges the significant investment made across industry in the implementation of the reforms to date and will seek to minimise further impacts’.
ASIC will publish its first report in relation to the regime in October 2022. The report ‘will include high-level insights into trends observed across the reports lodged by licensees during the period 1 October 2021 to 30 June 2022’. Licensees will not be named in this first report, however ‘ASIC will consult with stakeholders in advance of the commencement of licensee-level granular public reporting (likely in 2024)’.
Click here for details.
ASIC – Results of surveillance into internal dispute resolution
On 10 August 2022, ASIC released the results of its surveillance of trustees’ practices in relation to Regulatory Guide 271 Internal dispute resolution (RG 271), which came into effect on 5 October 2021. ASIC made the following four observations as part of its review:
- ‘10% of the funds that ASIC looked at recorded less than 10 complaints for every 10,000 members. This is significantly lower than the overall rate. ASIC is concerned that the low complaint rate may be a result of some trustees failing to record all member complaints or adopting an inappropriately narrow definition of ‘complaint’’;
- ‘2.7% of the total IDR responses were sent after the 45-day maximum timeframe…[so] ASIC is concerned that trustees may be over-applying the limited exceptions to the maximum timeframe or not sufficiently monitoring how long complaints take to resolve’;
- ASIC’s review found that ‘nearly 50% of the time’, complainants were not notified of their right to go to AFCA; and
- ‘[o]ne in three trustees advised ASIC that there were varying degrees of process failures or errors in their IDR systems. These included identifying or capturing complaints correctly, omitting mandatory content from IDR response letters or failing to send out IDR responses for some complaints’.
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Parliament – Act made in relation to various amendments to Treasury laws
On 9 August 2022, the Treasury Laws Amendment (2022 Measures No. 1) Bill 2022 was registered on the Federal Register of Legislation after being passed by both Houses of Parliament on 5 August 2022.
As referred to in our Super Alert of 29 July 2022, the Act will:
- amend ‘the AFCA Act to facilitate the closure and any transitional arrangements associated with AFCA replacing the SCT’ by providing ‘for the transfer of records and documents from the SCT to ASIC, the remittal of matters on appeal by the Federal Court, and [introducing] a rule-making power to allow the Minister to prescribe other matters of a transitional nature’; and
- amend the Social Security Act 1991 (Cth) and Veterans’ Entitlements Act 1986 (Cth) ‘to provide for certain commutations for the purposes of not exceeding the transfer balance cap. These amendments apply to market-linked and life expectancy products only’.
Amendments made to the (then) Bill by the Senate on 4 August 2022 did not affect the above two matters.
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ASIC – Reminder in relation to greenwashing
On 9 August 2022, ASIC published an article written by its Deputy Chair, Karen Chester. The article discusses Information Sheet 271 How to avoid greenwashing when offering or promoting sustainability-related products recently released by ASIC. According to the article, ‘greenwashing will remain a priority area of our regulatory focus at ASIC’ and ASIC will ‘monitor the market and will be looking for misleading claims about sustainability-related investments’.
Click here for details.
Legislation – Deferral of performance test for trustee-directed products
On 8 August 2022, the Superannuation Industry (Supervision) Amendment (Your Future, Your Super—Addressing Underperformance in Superannuation) Regulations 2022 were registered on the Federal Register of Legislation. The purpose of these regulations is to defer until 1 July 2023 the extension of the annual superannuation performance test to trustee-directed products.
Click here for details.
Treasury – Review of ASIC industry funding model
On 8 August 2022, Treasury released for public consultation the terms of reference for the review of ASIC’s industry funding model. The model commenced in July 2017 and the purpose of this review will be to consider, amongst other things:
- the ‘types of costs and nature of ASIC’s activities that are recovered from industry, how those costs are recovered and who they are recovered from’;
- how the costs are allocated by ASIC ‘to sub‑sectors, with a focus on regulatory activity that impacts multiple sub‑sectors, the consequences of time lags between regulatory action and cost allocation, and the changes to sub‑sector composition, including due to firm exits’; and
- whether the model can ‘respond to changes in industry, including emerging industry sectors’.
Click here for details.
APRA – Corporate plan for 2022/23 released
On 8 August 2022, APRA released its corporate plan for 2022/23. According to APRA, it intends to preserve the resilience of banks, insurers and superannuation funds by:
- ‘increasing its focus on the evolving financial landscape in Australia including responding to the impact of new financial activities and participants’;
- ‘helping to find solutions to important challenges such as superannuation retirement income products, retirement income longevity solutions, insurance accessibility and affordability for Australians, and the financial risks associated with climate change’; and
- ‘adopting the latest regulatory tools, techniques, and practices’.
Click here for details.
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