Super Alert – 18 August 2023: DDO complaints reporting; RSE licensee class exemption; ASIC enforcement priorities


Posted By and on 18/08/23 at 1:47 PM

Welcome to the latest issue of the KHQ Super Alert. This week, ASIC commenced a consultation proposing a time extension to the relief in a DDO instrument relating to complaints reporting. Additionally, APRA released the final instrument exempting a specific class of RSE licensee directors from the controlling stake provisions of the SIS Act.

Federal Court – ASIC appeal in relation to conflicted remuneration laws dismissed

On 17 August 2023, the Full Federal Court handed down its decision in Australian Securities and Investments Commission v Commonwealth Bank of Australia [2023] FCAFC 135. In the initial proceeding, which began in 2020 (see our Super Alert from 26 June 2020), ASIC alleged that the Commonwealth Bank of Australia (CBA) and Colonial First State Investments Limited (Colonial) (its wholly owned subsidiary) ‘breached conflicted remuneration laws when they reached an agreement in which Colonial paid CBA to distribute its Essential Super product to retail clients through CBA’s branch and digital channels’. A single judge of the Federal Court initially determined in Australian Securities and Investments Commission v Commonwealth Bank of Australia [2022] FCA 1149 that ASIC failed to establish that any conflicted remuneration had passed between the parties. The Full Federal Court has upheld the 2022 decision, with all three judges providing individual detailed reasons for doing so.

In a media release issued by ASIC on the same day, Deputy Chair Sarah Court said, ‘[w]hile the Full Court dismissed the appeal it accepted a number of ASIC’s submissions and, importantly, clarified the meaning and reach of the conflicted remuneration provisions for future matters’.

Click here and here for details.

ASIC – Consultation about extending DDO complaints reporting relief

On 15 August 2023, ASIC announced it is seeking feedback on proposed changes to an ASIC instrument related to design and distribution obligations. The ASIC Corporations (Design and Distribution Obligations Interim Measures) Instrument 2021/784 (Instrument) was initially made for two years. Among other things, it provides ‘relief for distributors from the obligation to report to product issuers if they received nil complaints during a reporting period’. See our Super Alert of 8 October 2021 for further information about the Instrument.

According to ASIC, the only changes it is proposing to make are to extend the expiry of the Instrument (until 5 October 2028) and ‘to remove an exemption for cashless welfare arrangements that is no longer necessary’, neither of which ASIC expects will ‘have a substantive effect on the operation of the [I]nstrument’.

Consultation will close on 25 August 2023.

Click here for details.

Legislation – Class exemption registered relating to controlling stake applications

On 14 August 2023, the Superannuation Industry (Supervision) Act exemption No. 1 of 2023 (Instrument) was registered on the Federal Register of Legislation. In a media release issued the following day, APRA advised that this Instrument ‘removes the requirement to obtain approval to own or control an RSE licensee for certain RSE licensee directors holding shares in the RSE licensee, where they are not entitled to a personal financial benefit from the shareholding’. APRA released a draft version of this Instrument for consultation earlier this year (see our Super Alert from 21 April 2023).

Click here and here for details.

ATO – Transfer balance caps available in myGov

On 14 August 2023, the ATO announced that individuals can now view their personal transfer balance caps through myGov. These are the individual caps that apply on and from 1 July 2023 following the indexation of the general transfer balance cap.

Click here for details.

ASIC – Speech relating to ASIC’s enforcement priorities and the role of general counsel

On 8 August 2023, ASIC released a speech given by Deputy Chair Sarah Court, in which she highlighted ASIC’s enforcement priorities (for example, greenwashing, poor design and distribution of financial products, and directors’ duties and governance failures). She noted in the speech that ASIC is required to ‘make careful choices’ about the enforcement matters they take on and will ‘generally select matters with a broad reach, which is likely to have a deterrent effect beyond the particular issue [ASIC is] prosecuting’.

The Deputy Chair also took the opportunity to comment on the role of general counsel when dealing with regulators explaining that ‘[a]n effective general counsel…is able to go back and explain to the business the regulatory purpose of the [enforcement] action. They will be familiar with the practices and processes involved; they will know how the regulator works internally; they ‘know the drill’. They will interpret that for the business, and engage and persuade, where appropriate, to assist bring [sic] about a resolution that both parties can live with’.

Click here for details.

This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).

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KHQ Lawyers - Sanela Osmanovic

Sanela Osmanovic Senior Associate

Sanela is a Senior Associate in our Superannuation & Financial Services team, and has a broad range of experience working with a range of superannuation fund trustees... Read More

KHQ Lawyers - Natalie Cambrell

Natalie Cambrell Director

Natalie leads our Superannuation & Financial Services team. With more than 25 years’ experience, she has an enviable reputation for her in-depth knowledge in these highly regulated and complex... Read More