Welcome to the latest issue of the KHQ Super Alert. This week, APRA published its finalised revision of SPS 250 Insurance in Superannuation and SPG 250 Insurance in Superannuation, while ASIC has commenced consultations in relation to consumer remediation and superannuation retirement calculators. The Attorney-General’s Department also issued a media release in relation to the highly anticipated privacy reforms.
ASIC – Consultation in relation to superannuation retirement calculators
On 18 November 2021, ASIC issued a media release indicating that it has released ‘Consultation paper 351 Superannuation forecasts: Update to superannuation calculators and estimates relief (CP 351) to seek stakeholder feedback on proposed updates to relief and guidance for superannuation forecasting tools’. ASIC notes that superannuation trustees who ‘provide these forecasting tools to consumers within the terms of ASIC’s relief are exempt from certain licensing and disclosure requirements associated with providing personal financial advice’.
As outlined in CP 351, ASIC proposes to:
- ‘continue providing its longstanding relief from personal financial advice requirements for persons who provide superannuation calculators and for superannuation trustees who provide retirement estimates to their members’;
- ‘adopt a single framework for how calculators and retirement estimates may be provided under ASIC’s relief, which will require trustees to have greater consistency between the assumptions used across their retirement estimates and superannuation calculators’;
- ‘set standard assumptions for retirement ages and inflation rates that must be used as the defaults, to foster consistency across the industry’; and
- ‘give greater flexibility to trustees to tailor forecasts based on their members’ investment strategies’.
ASIC is consulting on CP 351 until 28 January 2022 with an intention ‘to publish the updated instruments and guidance before the existing relief in ASIC Class Order [CO 11/1227] sunsets on 1 April 2022’.
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ASIC – Consultation in relation to consumer remediation
On 17 November 2021, ASIC issued a media release indicating that it has released draft guidance in the form of ‘Consultation paper 350 Consumer remediation: Further consultation’. The media release notes that ‘[proactive] remediation upon discovery of misconduct or other failures is necessary for licensees to achieve good outcomes for their consumers and comply with their licensing obligations’.
According to ASIC, the draft guidance, which has been expanded ‘to cover all financial services licensees, credit licensees and retirement service providers’, aims to:
- ‘help firms remediate with greater confidence and speed’;
- advise ‘how all licensees should act to ensure their remediations are conducted efficiently, honestly and fairly’; and
- enable ‘licensees to tailor it to the circumstances of their particular remediation’.
The consultation period ends on 11 February 2022.
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ATO – Addressing issues relating to clients requesting super transfers
On 16 November 2021, the ATO issued a media release noting issues it has identified in relation to ‘fund to fund super transfer requests using overseas or unreliable addresses drawn from ATO systems’. The ATO has ‘been unable to deliver these requests to the identified funds as the state and/or postcode fields are returning as blank’. The ATO plans to contact ‘clients with overseas or unreliable addresses that have completed a super transfer request on ATO Online since 14 March 2021, advising that they should contact their fund to complete the transfer’.
Importantly for trustees, the ATO has advised that:
- funds ‘could receive contact from impacted clients enquiring about the status of the transfer request or requesting a transfer’; and
- it intends ‘to engage with funds on any proposed solutions to ensure’ that it does ‘not create any unintended consequences in resolving this recent issue’.
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APRA – Final version of SPS 250 and SPG 250 published
On 12 November 2021, APRA published its finalised Prudential Standard SPS 250 Insurance in Superannuation (SPS 250) and Prudential Practice Guide SPG 250 Insurance in Superannuation (SPG 250). The finalised versions of SPS 250 and SPG 250 follows an extensive consultation period, most recently involving trustees receiving a letter updating them on APRA’s proposed revisions, which was discussed in our Super Alert of 23 September 2021. According to APRA, ‘[the] final revisions are aimed at ensuring better member outcomes through updated requirements for trustees to select, manage and monitor members’ insurance arrangements’.
APRA, consistent with its previous intention, has set the commencement date of SPS 250 as 1 July 2022.
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Treasury – Report requested in relation to exposure to derivatives by superannuation funds
On 11 November 2021, the Treasurer, Josh Frydenberg, issued a media release in relation to the registration of portfolio holdings disclosure regulations. However, as part of that media release, the Treasurer indicated that as part of industry feedback ‘it has become apparent that some superannuation funds have large exposures to derivatives’. Accordingly, the Government has ‘asked the Council of Financial Regulators (CFR) to prepare a report on this matter, drawing upon the information gathering powers of the Australian Prudential Regulation Authority and the input of relevant experts from across the CFR, including the Reserve Bank of Australia’.
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Attorney-General’s Department – Consultation for privacy reforms
On 25 October 2021, the Hon Michaelia Cash and the Hon David Coleman MP issued a joint media release in relation to the Federal Government’s proposed privacy reforms. The draft Privacy Legislation Amendment (Enhancing Online Privacy and Other Measures) Bill 2021 (Bill) proposes to create ‘a binding Online Privacy Code for social media services, data brokers and other large online platforms operating in Australia’.
The code proposes to require relevant online platforms to:
- ‘comply with strict new privacy requirements, including stronger protections for children on social media’;
- ‘take all reasonable steps to verify their users’ age, and give primary consideration to the best interests of the child when handling children’s personal information’; and
- ‘obtain parental consent for users under the age of 16’.
In addition to the Bill, a ‘discussion paper as part of the broader review of the Privacy Act 1988’ was also released. Submissions on the Bill are due on 3 December 2021, and submissions relating to the discussion paper are due on 7 January 2022.
