Welcome to the latest issue of the KHQ Super Alert. This week, APRA reminded trustees about the importance of having effective information security controls and the Government paused the expansion of the consumer data right into superannuation. The Supreme Court of Victoria also handed down a decision in relation to the application of the Crimes Act to trustee replacements.
Australian Law Reform Commission – Background paper in relation to the superannuation legislative framework
On 29 May 2023, the Australian Law Reform Commission (ALRC) released the eleventh background paper related to its review of the legislative framework for corporations and financial services regulation. The paper titled, Superannuation and the Legislative Framework for Financial Services provides an overview of the legal and regulatory landscape relevant to the superannuation industry and all of its complexities.
Click here for details.
Supreme Court – Application of Crimes Act to trustee replacements
On 29 May 2023, the Supreme Court of Victoria handed down its decision in Diversa Trustees Limited in its capacity as Trustee for the Future Super Fund [2023] VSC 279. This was an application to the Supreme Court seeking the Court’s consent to the soliciting, offering, giving and receiving of the indemnities in question for the appointment of a new trustee. The Court granted the orders sought.
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APRA – Letter to APRA regulated entities in relation to the use of multi-factor authentication
On 26 May 2023, APRA issued a letter to all APRA regulated entities reminding them to ‘remain vigilant and to continue to take steps to reduce the likelihood and impact of cyber-attacks’. APRA reminded entities of their obligations in Prudential Standard CPS 234 Information Security and highlighted multi-factor authentication (MFA) as one of the most effective controls used to prevent cyber-attacks. APRA also noted that while ‘MFA is a widely used technique to improve authentication controls, there are gaps in its implementation’, especially where its use by customers ‘has been deployed on an opt-in basis, or where exceptions have been granted for customers without mobile phones or located in areas without reliable phone reception’.
APRA also highlighted its intention to review CPS 234 in due course to clarify its ‘expectations on information security controls and provide additional guidance for industry’.
Click here for details.
Treasury – CDR expansion into superannuation paused
On 26 May 2023, the Government announced that it would pause the expansion of the consumer data right (CDR) into superannuation (see our Super Alert from 26 August 2022). This decision will allow further time for the ‘CDR to mature’ and ensure that it ‘is working as effectively as possible’.
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Legislation – New family law superannuation interest rate determination registered
On 25 May 2023, the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2023 (Determination) was registered on the Federal Register of Legislation. The Determination ‘provides the interest rate for adjusting entitlements under certain orders or agreements made under the Family Law Act 1975 and for splitting future superannuation benefits’ for the 2023/24 financial year.
The instrument commences on 1 July 2023.
Click here for details.
Treasury – Consultation on financial industry supervisory levies
On 25 May 2023, Treasury (in conjunction with APRA) released a discussion paper relating to the ‘proposed financial institutions supervisory levies for the 2023‑24 financial year’. These levies are ‘set to recover the operational costs of APRA’ and specific costs of certain other Commonwealth agencies, including Treasury and the ATO. For superannuation, the minimum levy ‘has increased to $12,500’ for 2023-24, while the maximum levy remains ‘unchanged at $800,000’.
The consultation period closes on 9 June 2023.
Click here for details.
Attorney-General’s Department – Report in relation to the review of the Modern Slavery Act
On 25 May 2023, the Attorney-General’s Department released its report in relation to the statutory review of the Modern Slavery Act 2018 (Cth) (see our Super Alert from 2 September 2022). The 140-page report is structured in three parts, ‘[r]eviewing the Modern Slavery Act’, ‘[r]evising the Modern Slavery Act’, and ‘[r]evising the administration of the Modern Slavery Act’ and includes a number of recommendations targeted at making the Modern Slavery Act and the administration of the Modern Slavery Act more effective.
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APRA – Nine updated reporting standards determined
On 23 May 2023, APRA determined nine updated reporting standards in relation to phase 1 of the superannuation data transformation (SDT) project. Earlier this year, APRA had released for consultation proposed minor amendments to the reporting standards (see our Super Alert from 10 March 2023). The updated reporting standards are:
- SRS 101.0 Definitions
- SRS 251.0 Insurance
- SRS 332.0 Expenses
- SRS 550.0 Asset Allocation
- SRS 605.0 RSE Structure
- SRS 606.0 RSE Profile
- SRS 705.0 Components of Net Return
- SRS 705.1 Investment Performance and Objectives
- SRS 706.0 Fees and Costs
Click here for details.
AFCA – Systemic issues insights report
On 22 May 2023, AFCA released its Systemic issues insights report for quarters 1 and 2 of the 2022-23 financial year. The bi-annual release of these reports is intended ‘to help improve industry practice and reduce complaints’. Relevantly to superannuation, AFCA presented two case studies:
- the first was about a financial firm’s ‘[f]ailure to provide relevant client records and documentation’; and
- the second was about a financial firm ‘[i]nappropriately allowing default insurance to lapse’.
AFCA notes that ‘[k]eeping accurate client records and providing for efficient access to client records are an integral aspect of customer care that’s expected of every financial firm’.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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