Welcome to the latest issue of the KHQ Super Alert. This week APRA and ASIC released a FAR information package which is important for super fund trustees, AFCA released its latest systemic issues report, and Treasury announced that consultations have opened in relation to amending the annual performance test.
APRA and ASIC – FAR information package released
On 14 March 2023, APRA and ASIC released an information package to assist entities to prepare for the Financial Accountability Regime (FAR). The package is not limited to the banking industry – it is also applicable to superannuation trustees. The guidance materials released include:
- ‘an information paper to assist entities and their accountable persons in understanding and complying with their obligations under the FAR’;
- ‘an updated accountability statement guide and template to help entities subject to the FAR enhanced notification obligations to prepare accountability statements’; and
- ‘reporting form instructions to assist entities in reporting FAR breaches to APRA and ASIC’.
As part of the information package, the regulators are seeking feedback from superannuation trustees in relation to:
- ‘steps insurance and superannuation entities should take ahead of the FAR’s commencement on 15 March 2025’; and
- ‘proposed amendments to the Regulator rules and draft key functions descriptions for insurance and superannuation entities’.
The consultation period closes on 19 April 2024. Also, APRA has recommended that trustees participate in the upcoming FAR webinar on 9 April 2024 which will provide trustees with the opportunity to ask questions to APRA and ASIC. Questions can be submitted ahead of the webinar.
Click here and here for details.
Exposure draft legislation – Family Law (Superannuation) Regulations
On 14 March 2024, the Attorney General’s department released an exposure draft of new Family Law (Superannuation) Regulations 2024. This has been prepared because the existing Family Law (Superannuation) Regulations 2001 are due to sunset on 1 April 2025.
According to the Attorney General’s media release, the superannuation splitting framework under the proposed new Regulations is to be substantially the same, but ‘as the existing Regulations were made in 2001, drafting changes are needed to modernise the language and ensure the provisions continue to operate effectively’. Also, it is stated that the proposed new Regulations ‘contain several changes to clarify provisions and ensure that superannuation splitting arrangements keep pace with developments in superannuation products and with broader superannuation policy’.
The consultation period closes on 26 April 2024.
Click here for details.
AFCA – Systemic insights report released
On 14 March 2024, AFCA released the latest edition of its ‘Systemic Issues Insights Report’. The report relates to the period July to December 2023. In relation to superannuation specifically, AFCA has advised that during this period it:
- reported to the regulators ‘1 contravention of the rules of a regulated superannuation fund’; and
- identified 11 systemic issues across the superannuation industry.
The three main systemic issues identified were:
- ‘[a]dequacy of claims handling process’ – and gave an example where ‘[i]ssues with [the] administrator cause poor complaints handling and processing of insurance claims’;
- ‘[b]reach of obligations under SIS Act and SIS Regulations’, for example, failing ‘to process superannuation rollover requests on time’; and
- ‘[c]ancellation of [insurance] policies’.
Click here for details.
Government – Proposed regulatory grid for financial services industry
On 11 March 2024, the Treasurer, the Hon Dr Jim Chalmers MP, announced that the Government ‘will introduce a financial sector regulatory initiatives grid to make sure the standard business of regulation is carried out in a more coordinated way’. The purpose of the ‘grid’ is to ‘help financial services businesses engage with the Government and regulators more effectively and allow regulators to avoid duplication, build shared strategic priorities, and focus on how to best implement reforms’. The intention is to model the grid on a similar set-up in the UK. The Government has advised that Treasury will consult with industry about the development of the grid.
Click here for details.
Treasury – Consultation in relation to annual superannuation performance test
On 8 March 2024, Treasury released a consultation paper titled ‘Annual Superannuation Performance Test – design options’. Treasury is seeking input from the industry in relation to ‘a range of options for reforming the test, should the government decide to do so in the future…[as] the government is focused on ensuring the test holds trustees to account for delivering the best financial outcomes for members’. The consultation proposes three options being retaining the status quo, adopting ‘a different single-metric framework’ or adopting ‘a multiple-metric framework’. Treasury is also open to considering any alternative options that the industry may put forward.
As stated on the Treasury webpage, the performance test ‘has applied to MySuper products since 1 July 2021 and to Trustee‑Directed Products (TDPs), a subset of the choice accumulation sector, since 1 July 2023’, and so the consultation to reform the test relates to both aspects.
The consultation period closes on 19 April 2024.
Click here and here for details.
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