Welcome to the latest issue of the KHQ Super Alert which provides an overview of new superannuation developments – and this is a bumper week of news! It includes the passage of temporary legislation to allow companies to electronically execute documents (again), ASIC’s feedback from a review of annual members’ meetings and new regulations in relation to the hawking of financial products and breach reporting to ASIC.
Treasury – Financial and auditing requirements for superannuation funds
On 12 August 2021, Treasury released an exposure draft of the Treasury Laws Amendment (Financial Reporting and Auditing Requirements for Registrable Superannuation Entities) Bill 2021. According to Treasury, the Bill will amend the Corporations Act 2001 (Cth) and SIS Act so as to require trustees to:
- ‘prepare and lodge financial reports for each financial year and half-year’ with ASIC;
- ‘publish the financial report, directors’ report and auditor’s report for a financial year on the RSE’s website and provide details of how to access these reports with the notice of the annual members meeting’; and
- ‘provide a copy of the financial reports for a financial year and half-year to members and beneficiaries on request’.
The consultation period closes on 8 September 2021.
Click here for details.
ASIC – Approach to upcoming reforms
On 12 August 2021, ASIC issued a media release in relation to the six Royal Commission reforms which will all commence in October 2021. Five of the reforms impact the superannuation industry, being the:
- ‘reference checking and information sharing requirements’ for financial advisers;
- breach reporting and the ‘notify, investigate and remediate’ obligations;
- design and distribution obligations;
- hawking; and
- internal dispute resolution (RG 271).
ASIC has advised that ‘[w]hile these reforms have been in the pipeline for some time, ASIC recognises they require significant changes to businesses’ systems and processes and take effect at the same time industry is facing other challenges, including from COVID-19 and renewed lockdowns’.
Accordingly, ‘ASIC will take a reasonable approach in the early stages of these reforms provided industry participants are using their best efforts to comply’.
Click here for details.
Parliament – Electronic execution of documents
On 10 August 2021, the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 passed both Houses of Parliament. As referred to in our Super Alert of 19 February 2021, the Bill ‘allows companies to execute documents, hold meetings, provide notices relating to meetings and keep minutes using electronic means or other alternative technologies’ (amongst other things).
This is temporary relief only and will apply until 31 March 2022. The changes will become effective once the Bill receives Royal Assent.
Click here for details.
Parliament – Bill to provide temporary ministerial power in relation to document execution
On 9 August 2021, the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 passed both Houses of Parliament and received Royal Assent the following day. As referred to in our Super Alert of 6 August 2021, the Bill amends the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 ‘to reinstate a temporary mechanism for ministers to change arrangements relating to meeting information and document requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to the challenges posed by COVID-19’.
This temporary power expired on 31 December 2020 but is proposed to now have effect until 31 December 2022.
Click here for details.
ASIC – Review of annual members’ meeting
On 6 August 2021, ASIC released its findings from its surveillance of annual members’ meetings held by 24 superannuation funds. According to ASIC, no ‘significant failures’ were identified, however there is ‘room for improvement in trustees’ communications to members and the ways in which they provide opportunities for members to ask questions at the meetings’.
ASIC has encouraged trustees to:
- ‘provide clear information to members on how to submit questions prior to and during the meeting…[this] will help give members the confidence to ask questions’;
- ‘share Q&A with the broader membership of the fund…[because] it is helpful when trustees capture answers to all questions asked at the annual members’ meeting in a separate document and post it alongside the meeting minutes on the fund website’; and
- provide ‘a video recording of the meeting…in addition to the minutes required to be provided’ because ‘notifying members of the ability to access this (e.g. through alternate communication channels such as e-newsletters or social media) increases the benefits of holding the meeting for the fund membership’.
Click here for details.
Legislation – Exemptions registered in relation to hawking of financial products
On 6 August 2021, the Financial Sector Reform (Hayne Royal Commission Response) (Hawking of Financial Products) Regulations 2021 were registered on the Federal Register of Legislation. These regulations set out the amendments to be made to the Corporations Regulations 2001 (Cth) to implement the Royal Commission recommendation relating to the hawking of financial products (which were given effect by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020).
The regulations insert specific exceptions to the hawking prohibition ‘in circumstances where a consumer is expected to have enough knowledge to adequately assess the suitability of the product or where another part of the law already provides a consumer with adequate protection from being hawked a financial product’. They do not provide any exceptions in relation to superannuation.
Click here for details.
Treasury – Policy paper in relation to single disciplinary body for financial advisers
On 6 August 2021, Treasury released a policy paper in relation to two matters which will be included in the regulations related to the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021. As referred to in our Super Alert of 25 June 2021, the Bill proposes to (amongst other things) ‘introduce ‘a single registration and disciplinary system under the Corporations Act for financial advisers who provide tax (financial) advice services’.
Treasury is seeking industry feedback in relation to:
- ‘the circumstances when ASIC must convene the single disciplinary body to determine a disciplinary matter’; and
- ‘the types of administrative sanctions made against a financial adviser that must be included on the Financial Advisers’ Register’.
In an associated media release, the Hon Jane Hume advised that the feedback ‘will inform the development of exposure draft Regulations which will be released later this year for further consultation. It is intended that Regulations will come into force on 1 January 2022, subject to passage of legislation’.
The consultation period closes on 20 August 2021.
Click here and here for details.
APRA – Getting ready for APRA Connect
On 6 August 2021, APRA published further information to assist entities in getting ready for APRA Connect. From 13 September, APRA Connect will be available ‘for entities to maintain entity information such as contact details, Responsible Persons and related parties’. APRA has advised that all ‘entities now need to prepare for APRA Connect production go-live and nominate their initial Regulatory Reporting Administrator via the [relevant] D2A form’.
Legislation – Regulations to support breach reporting reforms
On 5 August 2021, the Financial Sector Reform (Hayne Royal Commission Response—Breach Reporting and Remediation) Regulations 2021 were registered on the Federal Register of Legislation.
The Regulations amend the Corporations Regulations 2001 (Cth) (and similar regulations) to ‘support the breach reporting amendments in Schedule 11 to the Financial Sector Reform (Hayne Royal Commission Response) Act 2020’. This Act amends the breach reporting regime for AFSL holders and requires AFSL holders to report serious compliance concerns about financial advisers.
Click here for details.
