Welcome to the latest issue of the KHQ Super Alert. This week, the Bill proposing to introduce an objective of superannuation was introduced to the House of Representatives. ASIC also provided an enforcement and regulatory update and Treasury began consultation in relation to financial advice reforms.
Parliament – Objective of superannuation Bill introduced
On 16 November 2023, the Superannuation (Objective) Bill 2023 (Cth) was introduced to the House of Representatives. The Bill proposes to introduce a new standalone Act which states that ‘[t]he objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’.
According to the Explanatory Memorandum, this Bill proposes to require ‘policy makers to assess future changes to superannuation legislation for compatibility with this objective’. Importantly, the Explanatory Memorandum also states that the objective is not intended to:
- ‘change the operation or interpretation of existing superannuation law, prudential standards or governing rules of superannuation entities’;
- ‘impact regulatory supervision activities’; or
- ‘guide the regulation of trustees’ conduct or change existing trustee obligations’.
Click here for details.
ASIC – Enforcement and regulatory update
On 15 November 2023, ASIC released Report 777 ASIC enforcement and regulatory update: July to September 2023 which highlights ASIC’s recent enforcement work, including in relation to alleged ‘member services failures’ and greenwashing. Although the report covers all financial service entities that ASIC regulates, the associated media release focuses solely on the superannuation industry.
In the media release, ASIC said that it ‘will look to take strong, targeted enforcement action in the coming months and into 2024, as part of its focus on member outcomes in the superannuation sector’. ASIC Chair Joe Longo said that ASIC’s ‘focus on the best interests of members in the superannuation sector is part of [ASIC’s] continuing work to make the financial system fair for all Australians’.
Click here for details.
Treasury – Consultation in relation to financial advice reform
On 14 November 2023, Treasury released for consultation exposure draft legislation and explanatory material which ‘responds to several recommendations of the Quality of Advice Review’ (see our Super Alert from 10 February 2023 for details on the Quality of Advice review).
According to the Explanatory Memorandum, the proposed amendments to be made as part of the Treasury Laws Amendment (2024 Measures No. 1) Bill 2024 (Cth) include:
- to repeal and replace section 99FA of the SIS Act to:
- ‘provide greater clarity about the basis and circumstances in which a trustee can charge a fee for financial product advice from a member’s superannuation interest’;
- set ‘out requirements to be satisfied before the trustee can charge the cost of advice against the member’s interest in the fund’ for example, that the cost is charged ‘in accordance with the terms of a written request or written consent of the member’; and
- clarify that ‘the payment of the financial product advice by the fund…is taken to be a direct cost of operating the fund’ (for the purposes of the SIS Act and SIS Regulations);
- to repeal and replace Subdivision B of Division 3 of Part 7.7A of the Corporations Act to provide ‘for a consolidated and streamlined consent process when a client enters or renews an ongoing fee arrangement’; and
- to amend the Corporations Act to:
- provide ‘more flexibility on how FSG requirements can be met’; and
- clarify ‘the provisions governing conflicted remuneration’.
In an associated media release, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP said that this first tranche of draft legislation ‘adopts half of the recommendations of the Quality of Advice Review’.
Consultation will close on 6 December 2023.
Click here and here for details.
ASIC – Report about vigilance in combatting cyber threats
On 13 November 2023, ASIC released Report 776 Spotlight on cyber: Findings and insights from the cyber pulse survey 2023 (Report 776) (see our Super Alert from 16 June 2023 for details on the survey). Of the almost 700 survey participants, only 12 were superannuation trustees. Some key survey results highlight that:
- ‘44% of participants do not manage third-party or supply chain risk’;
- ‘58% of participants have limited or no capability to protect confidential information adequately’; and
- ‘33% of participants do not have a cyber incident response plan’.
In an associated media release, ASIC Chair Joe Longo said, ‘[t]here is a need to go beyond security alone and build up resilience – meaning the ability to respond to and recover from an incident. It’s not enough to have plans in place. They must be tested regularly – alongside ongoing reassessment of cyber security risks’.
Click here for details.
Supreme Court of Queensland – Validity of binding death benefit nominations made under a power of attorney
On 23 October 2023, the Supreme Court of Queensland handed down its decision in Re Rentis Pty Ltd [2023] QSC 252. Although this case related to a self-managed superannuation fund, it may be of broader interest because it deals with the validity of binding death benefit nominations made under an enduring power of attorney. The power of attorney in question included an express provision authorising the attorney(s) to renew any binding death benefit nomination made by the relevant member for any superannuation benefit entitlement. The Court held that the binding death benefit nomination was within the attorney’s authority to make, and that it was valid.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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