Welcome to the latest issue of the KHQ Super Alert. In another big week, APRA released the latest MySuper Heatmap and annual superannuation statistics, Treasury initiated two consultations, various Acts and regulations were registered and AUSTRAC released two sets of guidance.
APRA – 2022 MySuper Heatmap released
On 15 December 2022, APRA released the ‘2022 MySuper Heatmap’ and accompanying information papers.
According to APRA, key findings include:
- ‘[f]ees and costs have fallen for most MySuper products…APRA estimates [indicate] that … 56 per cent of member accounts’ have experienced this reduction;
- ‘28 MySuper products have closed since APRA released the first heatmap in 2019’;
- ‘around 800,000 members’ accounts remain in…underperforming products’; and
- ‘[s]ustainability pressures exist across the industry, with most superannuation funds posting negative growth over the past three years’.
Release of the ‘Choice Heatmap’ has been deferred until 2023.
APRA has also published updated FAQs on APRA’s superannuation heatmaps and Superannuation Data Transformation.
Click here, here and here for details.
ATO – Updated industry changes roadmap
On 15 December 2022, the ATO released an updated roadmap which ‘details the changes affecting the super industry up until the end of June 2023’. The ATO updates this information whenever there are major changes or announcements.
Click here for details.
APRA – Annual superannuation statistics
On 14 December 2022, APRA published the annual statistics on superannuation funds and MySuper products. The fund-level statistics contain ‘information on fund profile and structure, financial performance and position, conditions of release, fees and membership’ of individual funds and trustees. The MySuper statistics include information on each MySuper product’s ‘profile and structure, financial performance, fees and membership’.
Click here and here for details.
WA Supreme Court – Judgement confirming that debt order cannot operate against future superannuation payments
On 13 December 2022, the Supreme Court of Western Australia handed down its judgement in James Villa Holidays Limited v Crabtree [2022] WASC 428. The case concerned a debt appropriation order which was made against a superannuation trustee. The relevant creditors argued that they were not seeking to have the funds immediately paid to them. Instead, they argued that ‘the debt appropriation order should operate from the date on which the judgment debtors are entitled to payment from the superannuation fund’ (ie, when the relevant member meets a condition of release).
The Court found that ‘there is no direct authority on this point’ but allowing the debt appropriation order to stand would be inconsistent with the intention of the SIS Act. The Court considered that the SIS Act makes clear ’that the superannuation asset of individuals is protected from their creditors…[and to] simply allow the issue of a debt appropriation order which will have an effect at some time in the future undermines the structure of the superannuation system’. This is because the ‘immediate protection offered to superannuation assets would really be illusory…[and] would be stripped from the superannuant at a later date’. Accordingly, the debt appropriation order was set aside.
Click here for details. (You will need to accept the website’s terms and conditions in order to proceed to the judgement.)
Federal Register of Legislation – Miscellaneous amendments to superannuation regulations made
On 12 December 2022, the Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2022 were registered on the Federal Register of Legislation. Of note for superannuation trustees is that:
Division 3 repeals a redundant provision in the Superannuation Industry (Supervision) Regulations 1994 (regulation 11.02A – service of a contravention notice on the trustee of a fund); and
Division 4 amends regulation 20(1) of the Superannuation (Unclaimed Money and Lost Members) Regulations 2019 (SUMLM Regulations) ‘to prescribe certain matters that must be satisfied before the [ATO] can pay amounts to KiwiSaver scheme providers’.
Click here for details.
Treasury – Climate-related financial disclosure consultation paper
On 12 December 2022, Treasury released a consultation paper titled Climate-related financial disclosure, seeking ‘initial views on key considerations for the design and implementation of the Government’s commitment to standardised, internationally-aligned requirements for disclosure of climate related financial risks and opportunities in Australia’. The paper lists six ‘reform principles’ which ‘will guide the climate-related financial disclosure reforms, and the final design of new requirements’.
The paper proposes that ‘mandatory climate-related financial risk disclosure requirements would also apply’ to superannuation funds.
Consultation closes on 17 February 2023.
Click here and here for details.
Treasury – Consultation on legislation to improve corporations and financial services law
On 12 December 2022, Treasury released for consultation draft legislation which aims ‘to reduce the complexity of Australia’s corporations and financial services laws‘, making them more ‘adaptive, efficient, and navigable within existing policy settings’. The draft legislation implements further recommendations made by the Australian Law Reform Commission (ALRC) in its Inquiry into the Legislative Framework for Corporations and Financial Services Regulation.
Two recommendations from the ALRCs Interim Report A proposed to be implemented, relate to:
- creating a ‘single glossary of defined terms in section 9 of the Corporations Act 2001’; and
- ‘unfreezing’ the Acts Interpretation Act 1901 so the most current version applies to the Corporations Act and Australian Securities and Investment Commission Act 2001.
Three recommendations from the ALRCs Interim Report B proposed to be partially implemented are:
- to repeal definitions no longer used as well as ‘cross references to repealed provisions and other redundant provisions’;
- amendments to ‘address unclear or incorrect provisions’; and
- to ‘simplify unnecessarily complex provisions, with a particular focus on terms defined as having more than one meaning and definitions containing substantive obligations’.
Consultation closes on 15 January 2023.
Click here for details.
AUSTRAC – Guidance for reporting entities
On 12 December 2022, AUSTRAC released updated guidance titled Supporting customers who don’t have standard identification and new guidance titled Tips to help you get your 2022 compliance report right.
According to AUSTRAC, the updated guidance relates to:
- ‘which customers may require a flexible approach due to their circumstances;
- the suggested risk-based approach, particularly in low-risk situations and when there is a change in a customer’s risk profile;
- the forms of alternative reliable and independent identification that can be used; and
- examples of the flexible approach in action’.
Three tips are provided to assist reporting entities with their 2022 compliance report:
- to ‘ensure that outsourced AML/CTF functions are tailored to your business’;
- to ‘use a strong transaction monitoring program to detect suspicious activity’; and
- to utilise ‘AUSTRAC’s education and guidance materials’.
The 2022 compliance report must be submitted by 31 March 2023.
Click here and here for details.
Parliament – Bills assented to
On 12 December 2022, the Treasury Laws Amendment (2022 Measures No. 2) Bill 2022, Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 and the Crimes Amendment (Penalty Unit) Bill 2022 all received Royal Assent. They were subsequently registered on the Federal Register of Legislation on 13 December 2022. See our Super Alert of 2 December 2022 for details on these Bills.
Click here, here and here for details.
Australian Law Reform Commission – New background paper relating to review of financial services legislation
On 9 December 2022, the ALRC released its ninth background paper as part of its Review of the Legislative Framework for Corporations and Financial Services Regulation (see our Super Alert of 18 September 2020). The paper, titled All roads lead to Rome: unconscionable and misleading or deceptive conduct in financial services law, builds on work outlined in Interim Report A and ‘aims to draw attention to a problem in the law: the proliferation of provisions directed at broadly similar instances of misconduct, in a way that serves to cloud the fundamental norms and clutter the statute books’.
Click here for details.
ASIC – July to September 2022 regulatory update
On 12 December 2022, ASIC issued a media release announcing its release of Report 753 ASIC enforcement and regulatory update: July to September 2022 which outlines ASIC’s key actions taken during that quarter. Key actions relevant to the superannuation industry include, calling on trustees ‘to improve their target market determinations’ and ‘review their internal dispute resolution arrangements’ and updating consumer remediation guidance.
Click here for details.
Federal Register of Legislation – Extension of existing ‘dealing’ relief for trustees
On 8 December 2022, the Treasury Laws Amendment (Rationalising ASIC Instruments) Regulations 2022 was registered on the Federal Register of Legislation. These amending regulations move an existing exemption from the ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 (ASIC Instrument) into the Corporations Regulations 2001. The exemption provides ongoing relief to the trustee of a registrable superannuation entity ‘for dealing in a financial product (other than an interest in the entity) in the ordinary course of operation of the entity’.
The exemption in the ASIC Instrument is due to expire on 31 December 2022 and the regulations will commence on 1 January 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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