Super Alert – 21 April 2023: tranche 2 AML/CTF reforms; financial adviser standards; APRA life insurance stats


Posted By and on 21/04/23 at 12:17 PM

Welcome to the latest issue of the KHQ Super Alert. This week, the Attorney-General’s department announced that it had commenced consultation on proposed changes to Australia’s AML/CTF regime and APRA released a draft legislative instrument and an information paper on combining investment history in the annual performance test.

APRA – Legislative instrument and information paper released for combining investment history in annual performance test

On 20 April 2023, APRA released for consultation a draft legislative instrument called Superannuation Technical Determination No. 1 of 2023 – Actual and benchmark return formulae modifications. In a letter released with the instrument, APRA explained that the purpose of the instrument is to ‘relocate existing guidance’ relating to the annual performance test ‘into a legal instrument’. This relates to APRA’s guidance released in August 2021 relating to combining MySuper product performance histories (see our Super Alert of 20 August 2021). It is proposed that the instrument will apply only to ‘within-product changes’, for example ‘where there have been changes to the structure or nature of the product (for example, single strategy to lifecycle), but the product continues to exist’.

Consultation will close on 11 May 2023.

APRA also issued an information paper outlining APRA’s approach to combining the investment performance history of trustee-directed products. It is on similar terms to the August 2021 MySuper paper referred to above. The annual performance test will apply to these products from 1 July 2023.

Click here for details.

Attorney- General’s Department – Consultation on changes to AML laws

On 20 April 2023, the Attorney-General’s Department released a consultation paper relating to ‘reforms to simplify and modernise the [AML/CTF] regime’. Both the Attorney-General, the Hon Mark Dreyfus KC MP, and AUSTRAC issued media releases on the same day commenting on the release of the consultation. According to AUSTRAC, the reforms propose to:

  • modernise ‘the regime in line with international standards and best practice’;
  • reduce the ‘complexity and regulatory burden on industry’;
  • ‘ensure the [AML/CTF] regime remains fit for purpose’; and
  • ‘harden Australian businesses and sectors against exploitation by serious organised criminals’.

Consultation will close on 16 June 2023.

Click here, here and here for details.

AUSTRAC – Updated guidance on employee due diligence and AML/CTF training

On 20 April 2023, AUSTRAC announced it had released updated guidance on employee due diligence and AML/CTF risk awareness training to help AUSTRAC-regulated entities meet their obligations. The updated guidance provides an overview of the risks an entity may face when meeting its obligations and ‘outlines best practices to help mitigate those risks’.

Click here for details.

APRA – Class exemption for RSE directors to own or hold a controlling stake in RSE licensee

On 19 April 2023, APRA issued a letter to RSE licensees relating to a draft legislative instrument, the Superannuation Industry (Supervision) Act exemption No 1 of 2023 (Draft Exemption), which has been released for consultation. The Draft Exemption proposes to ‘exempt a specified class of persons from compliance with the change of control and ownership provisions’ in the SIS Act.

APRA explained that certain directors ‘are required to hold shares in the RSE licensee for the term of their appointment’. However, these directors may ‘not [be] entitled to a personal financial benefit from the shareholding’. In addition, given that ‘directors are considered to be associates of each other, each director shareholder is treated as having a 100 per cent stake in the RSE licensee, and thus is deemed to have a controlling stake…even where an individual director has a shareholding of 15 per cent or less’.

Accordingly, the Draft Exemption proposes ‘to remove the requirement for this class of RSE licensee directors to obtain approval to own or control an RSE licensee’.

Consultation will close on 17 May 2023.

Click here for details.

Treasury – Consultation on changes to financial adviser standards

On 18 April 2023, Treasury released for public consultation a proposed Bill called the Treasury Laws Amendment (Measures 3 for Future Bills) Bill 2023: Recognising  experience in the financial advice industry. According to the exposure draft explanatory materials, the purpose of the Bill is to:

  • amend ‘the Corporations Act to deliver the Government’s election commitment to better recognise the experience of existing financial advisers as equivalent to tertiary study’; and
  • address ‘technical limitations in the current framework, relevant to both new entrants into the financial advice industry and tax agents providing a tax (financial) advice service’.

In an associated media release, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, stated that the draft legislation is aimed at better recognising ‘the experience of long-serving advisers’.

Consultation will close on 3 May 2023.

Click here and here for details.

APRA – Life insurance claims and disputes statistics issued

On 18 April 2023, APRA issued its biannual life insurance claims and disputes statistics for the period 1 January 2022 to 31 December 2022. In the latest statistics, the claims admittance rate for ‘Group Super’ was 98% for death cover and 92% for TPD cover.

Click here for details.

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

Want KHQ Super Alerts delivered straight to your inbox each week? Click here to subscribe. 

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