Welcome to the latest issue of the KHQ Super Alert. This week, the Government announced that it will proceed with updating the performance test for choice products, Treasury commenced consultations in relation to NALI/NALE rule changes and an ASIC instrument delaying the registration period for financial advisers was registered.
Parliament – CSLR Bills passed by the Senate
On 22 June 2023, the Compensation Scheme of Last Resort (CSLR) Bills were passed in the Senate and now await Royal Assent. As mentioned in our Super Alert from 10 March 2023, the Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2023, the Financial Services Compensation Scheme of Last Resort Levy Bill 2023 and the Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023 were re-introduced to Parliament on 8 March 2023.
In a media release issued on the same day by the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, it was announced that ‘the Government will fund the costs to establish the body that will operate the CSLR, including funding the costs of the first levy period through to the end of the 2023‑24 financial year’. The financial industry will fund the scheme for future years. Claims for compensation will be able to be lodged from April 2024.
Click here, here, here, and here for details.
APRA – New FAQs released in relation to performance test for choice products
On 22 June 2023, APRA published six new frequently asked questions (FAQs) in relation to the Your Future, Your Super reforms. Five previous FAQs were also updated. The new FAQs are as follows:
- ‘How do trustees determine which investment options offered to members are Trustee Directed Products (TDPs) for the 2023 Performance Test?’
- ‘Is a managed investment scheme on an investment menu subject to the performance test?’
- ‘Does the legal characterisation of an interest in a managed investment scheme (MIS) affect the determination of whether it is a TDP?’
- ‘Can trustees resubmit SRS 550.0 reporting having regard to the changes to covered asset classes in the Regulations?’
- ‘How will APRA determine Strategic Asset Allocations (SAA) where disaggregated asset classes are reported as sub-sector or sector SAAs in SRS 550.0 (Table 1)?’
- ‘Which data items from APRA’s reporting forms are used to calculate a product’s performance test result?’
Click here for details.
APRA – Updated SDT FAQ
On 21 June 2023, APRA released an updated frequently asked question in relation to the superannuation data transformation project. The updated FAQ is ‘General 1.25 When will APRA revoke pre-SDT Reporting Standards that were replaced under Phase 1?’.
Click here for details.
ASIC – Speech in relation to technology in the financial sector
On 20 June 2023, ASIC released a speech presented by its Chair Joe Longo encouraging ‘financial industry organisations to help lead through change’. The speech focused on leading in transparency and leading in technology, specifically in relation to the use of artificial intelligence. ASIC cautioned the financial industry against rushing into AI innovations without ‘applying appropriate controls and proper governance’ allowing them to avoid ‘unintended consequences’.
Click here for details.
ATO – Resources to assist members protect themselves from tax scams
On 20 June 2023, the ATO issued a media release reminding trustees to educate members ‘about the love languages of a tax scammer’. The ATO has included a list of warning signs which can help members not to fall for a scam as well as links to other resources.
Click here for details.
Treasury – Draft legislation in relation to NALI/NALE provisions
On 19 June 2023, Treasury released for consultation draft legislation intended to enact amendments to the non-arm’s length income/expense (NALI/NALE) provisions. The Treasury Laws Amendment (Measures for Consultation) Bill 2023: Non‑arm’s Length Expense Rules for Superannuation Funds contains amendments to the Income Tax Assessment Act 1997 that were announced as part of the 2023-24 Federal Budget (see our Super Alert from 12 May 2023).
Consultation will close on 7 July 2023.
Click here for details.
Legislation – ASIC instrument registered relating to delaying financial adviser registration
On 19 June 2023, the ASIC Corporations (Registration of Relevant Providers) Instrument 2023/490 was registered on the Federal Register of Legislation. This instrument gives effect to ASIC’s recent announcement that the date by which financial advisers must be registered is being delayed until 1 October 2023 (see our Super Alert from 9 June 2023).
This instrument commenced on the day after it was registered.
Click here for details.
Government – Updates to performance test for TDPs
On 16 June 2023, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, issued a media release announcing that ‘the Government will update the [SIS] regulations for the August 2023 performance test’ for choice products. The draft regulations, called the Superannuation Industry (Supervision) Amendment (Your Future, Your Super – Addressing Underperformance in Superannuation) Regulations 2023, were released for consultation earlier this year (see our Super Alert from 6 April 2023).
Now that consultation has been completed, the Government has announced that the ‘updated test will address unintended consequences identified in the Your Future, Your Super review, while ensuring it is more fit‑for‑purpose for Choice products’. Changes include:
- ‘[t]he minimum testing period will be increased in line with the increase of the longer-term investment testing ‘lookback’ period’;
- ‘[k]ey benchmarks will be calibrated to ensure that funds are not unintentionally discouraged from investing in certain assets’; and
- ‘platform and non-platform products will be benchmarked against a median fee’ in ‘assessing the representative administration fee’ for those products.
Click here for details.
Treasury – FRAA framework to assess APRA and ASIC
On 15 June 2023, Treasury released for consultation, the Draft Financial System and Regulator Metrics Framework (Framework), developed by the Financial Regulator Assessment Authority (FRAA). The Framework is designed to enhance the FRAA’s ‘ability to assess the effectiveness and capability’ of APRA and ASIC ‘and to assist the FRAA to provide context and insights for its reviews’.
Consultation will close on 27 July 2023.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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