Welcome to this week’s issue of the KHQ Super Alert. ASIC commenced several proceedings against AFS licensees this week, including an interesting proceeding alleging failure of duties because of inadequate cybersecurity. Also, the AAT determined a case concerning grandfathered account-based pensions.
ASIC – Federal Court proceedings commenced
On 21 August 2020, ASIC announced that it had commenced proceedings against an AFS licence holder ‘for failing to have adequate cyber security systems’ in place. ASIC alleges:
- that the AFS licence holder ‘failed to have implemented…adequate policies, systems and resources which were reasonably appropriate to manage risk in respect of cybersecurity and cyber resilience’; and
- several general AFSL obligations under section 912A of the Corporations Act were breached, including the duty to ensure financial services ‘are provided efficiently, honestly and fairly’.
Click here for details.
AAT – Decision in relation to grandfathered account-based pension
On 17 August 2020, the Administrative Appeals Tribunal handed down its decision in Farag and Farag and Secretary, Department of Social Services (Social services second review) [2020] AATA 296. The case related to a member’s request to transfer an account-based pension from one fund to another. As the pension was commenced prior to 1 January 2015, it was excluded from the income test for the purposes of the age pension. As a result of the transfer, the pension lost its grandfathered status which was an outcome unintended by the member.
Although the Tribunal sympathised with the member’s circumstances, it found that neither it nor the Secretary of the Department of Social Services had any discretion under the Social Security Act 1991 (Cth) to undo the adverse effects of the transfer.
Click here for details.
Federal Budget – industry submission
On 17 August 2020, the SMSF Association published the supplementary Budget submission that it provided to the Federal Government for the 2020/21 Budget. The SMSF Association called on the government to simplify the regulatory framework for the financial advice industry. Of broader relevance beyond the SMSF industry, it argued that:
- ‘financial advisers should have the ability to access superannuation tax portals of their clients as they continue to advise on the complexity of superannuation’;
- a ‘single education framework…[should replace] the current separate education standards for financial advisers set by FASEA and tax (financial) advisers set by the TPB’; and
- ‘the regulation of financial advice should also be decoupled from recommendations of financial products, reflecting a history in which a product recommendation was the core component of most financial advice. In a professional financial advice sector, this is no longer the case’.
Click here for details.
APRA – Superannuation early release scheme
On 17 August 2020, APRA published the latest summary of the weekly data from the COVID-19 early release scheme. According to APRA, payments to members are being processed on average within 3.3 business days after receipt of the application from the ATO, and only 5% of applications are taking longer than 5 business days. The total value of payments since inception of the program is $31.1billion.
Click here for details.
