Welcome to the latest issue of the KHQ Super Alert. This week, ASIC released a report in relation to its review of DDO compliance and Parliament passed the Bill to include sustainability reports in annual financial reports. The ATO also released guidance materials relating to the timing for reporting various matters to the ATO including reporting errors.
ATO – Timing for reporting obligations
On 12 September 2024, the ATO issued a media release in relation to important ‘reporting obligations and lodgment [sic] dates for APRA funds’. The media release summarises the timing for various reporting obligations such as member contributions, updates to member details, lost members and unclaimed super and DASP payments.
Click here for details.
Treasury – Ban on adverse genetic testing results in life insurance
On 11 September 2024, Treasury issued a media release announcing that the Government will prohibit the use of adverse predictive genetic test results in underwriting life insurance. As reported in our Super Alert of 1 December 2023, this follows a consultation Treasury conducted from 27 November 2023 to 31 January 2024 to determine whether intervention should occur to prevent discrimination based on adverse genetic testing.
According to Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, ‘this change will give Australians the confidence to undertake genetic testing without fear it will impact their ability to access financial security through life insurance’.
Click here for details.
ATO – Voluntary disclosure for APRA funds
On 11 September 2024, the ATO published guidelines for when and how APRA-regulated funds should make voluntary disclosures of instances of administrative and reporting errors. The article contains information about how to make a voluntary disclosure via the Super Enquiry Service (SES), what information must be provided and how that disclosure is processed by the ATO.
According to the ATO, APRA-regulated funds should contact the ATO as soon as possible if:
- they make ‘an error in [their] reporting or payment obligations’;
- they are ‘having difficulty complying with [their] reporting or payment obligations’; or
- they are ‘unsure about a compliance matter’.
Click here for details.
Legislation – Updates to superannuation calculators and retirement estimates
On 10 September 2024, the ASIC Corporations (Amendment) Instrument 2024/733 was registered on the Federal Register of Legislation. As referred to in our Super Alert of 12 July 2024, ASIC had previously announced a proposal to reduce the current nominal wage inflation rate in both the ASIC (Superannuation Calculators and Retirement Estimates) Instrument 2022/603 and Regulatory Guide 276 Superannuation forecasts: Calculators and Retirement estimates from 4% to 3.7%.
This change has now been made by the instrument. According to the Explanatory Statement, the amendment will ‘ensure the default rate of inflation used to calculate present values under [Instrument 2022/603] reflects the current long-term forecast of nominal wage inflation’.
Click here for details.
Treasury – Interim report on sustainable finance taxonomy
On 10 September 2024, Treasury released its interim report on the initial phase of developing a ‘sustainable finance taxonomy’ that will provide ‘common definitions for sustainable economic activities in Australia and help direct private investment to activities that will support Australia’s transition to net zero emissions’. As referred to in our Super Alert of 21 June 2024, Treasury had previously released its roadmap in relation to the ten priority areas for sustainable finance reforms, and working with the Australian Sustainable Finance Institute to develop an Australian sustainable finance taxonomy was listed as the second priority.
Click here for details.
ASIC – Design and distribution obligations update
On 10 September 2024, ASIC released Report 795: Design and Distribution Obligations: Compliance with the Reasonable Steps Obligation (REP 795), which outlines ASIC’s findings from its monitoring of ‘19 issuers of high-risk investment, insurance and credit products between October 2023 and August 2024’.
According to ASIC, issuers still need to take more action to comply with the reasonable steps obligation. In particular, ASIC found:
- there were ‘limited due diligence arrangements to assess and monitor third-party distributors’ and their ability to distribute a product in accordance with the TMD;
- ‘some issuers of high-risk products were relying on broad search terms in online marketing’;
- there were ‘poor quality questionnaires’ being used that did not seek to understand a consumer’s attributes and had poor design features such as prompts with ‘correct’ responses; and
- there was limited monitoring of consumer outcomes to inform product governance arrangements and future distribution practices.
In an accompanying media release, ASIC Commissioner Alan Kirkland said that ‘[t]his review provides a snapshot of compliance with the design and distribution obligations across multiple industries and products. Where there are opportunities to improve, we expect product issuers and distributors to reflect on the report’s findings and improve their distribution practices’.
Click here and here for details.
AFCA – Consultation on Approach documents to ICA provisions
On 9 September 2024, AFCA commenced consultations for a new Approach document relating to sections 29(6) and (7) of the Insurance Contracts Act 1984 (Cth) and an amended Approach document for delayed insurance claims in superannuation. AFCA has made minor clarifying amendments to its current Approach to delayed claims in superannuation, and does not intend to change the substance of that existing Approach.
This consultation closes on 30 September 2024.
Click here for details.
ATO – Downsizer super contributions
On 9 September 2024, the ATO released the latest data relating to downsizer contributions made in recent financial years. These contributions can be made by people who are over 55 years old who can make super contributions up to $300,000 from the proceeds of the sale of their home. The data for the 2023/24 financial year found that approximately 13,000 individuals contributed over $3.3 billion into super using this method.
Click here for details.
Parliament – Climate-related financial disclosure Bill passes Parliament
On 9 September 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) was finally passed by both Houses of Parliament. As reported in our Super Alert of 23 August 2024, this Bill requires entities to make new disclosures in financial reports relating to climate and sustainability standards. The changes apply to superannuation trustees ‘where the value of assets at the end of the financial year (including the entities it controls) is equal to or greater than $5 billion’ (referred to as Group 2 entities).
Click here for details.
Treasury – Report on Statutory Review of the Meetings and Documents Amendments
On 9 September 2024, Treasury published the final report in relation to the Statutory Review of the Meetings and Documents Amendments. As referred to in our Super Alert of 28 June 2024, the independent panel was required to consider the effects of Schedule 1 of the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 and Corporations Amendment (Meetings and Documents) Act 2022.
The panel found that ‘company boards and managers, and also members, are still learning to adjust to the new technological environment made possible by [these changes]’. The panel has made various recommendations for the Government to consider. In an accompanying media release, Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, said that the ‘Government will consider the Panel’s report and publish its response to the recommendations in due course’.
Click here and here for details.
ASIC – Enforcement and regulatory update
On 9 September 2024, ASIC published Report 794: ASIC Enforcement and Regulatory Update for January 2024 to June 2024, which outlines its ‘recent outcomes in enforcement and regulation’. Case studies included in the report relate to financial hardship, scams, greenwashing and unconscionable conduct.
In an accompanying media release, ASIC Deputy Chair Sarah Court said that ‘[ASIC is] actively conducting investigations into suspected breaches of hardship obligations. [It] will not hesitate to take enforcement action to ensure compliance’. ASIC also announced that it will release the results of its investigations into how superannuation funds are handling death benefit claims in coming months.
Click here and here for details.
APRA – Minor changes to CPS 511 announced
On 6 September 2024, APRA sent a letter to all regulated entities advising that it was proposing to make some minor changes to its prudential framework. The only superannuation-related standard which is impacted is CPS 511 Remuneration. APRA is proposing to:
- delete cross-references to the Banking Act in CPS 511 and instead replace them with references to the Financial Accountability Regime Act 2023 (Cth); and
- ‘address minor typographical errors’.
Click here for details.
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