Welcome to this week’s issue of the KHQ Super Alert. The numerous updates this week seem to indicate that regulatory activity in the industry is picking up again. The key news for this week is that the government has extended the time limits for the operation of several COVID-related relief measures and ASIC has made a minor update to fee disclosure rules.
ASIC – Clarification of fee disclosure rules
On 23 September 2020, the ASIC Corporations (Amendment) Instrument 2020/853 (Instrument) was registered on the Federal Register of Legislation. The Instrument amends the ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070 (which only applies to PDSs issued after 30 September 2022) to clarify that if a trustee charges an administration fee that applies regardless of a member’s account balance, this should be included in the fees and costs example.
The additional wording relates to the row for ‘Administration fees and costs’, with new wording as follows indicated in underline:
- ‘For every $50,000 you have in the superannuation product, you will be charged or have deducted from your investment $[ ] in administration fees and costs, plus $[ ] regardless of your balance.’
Click here for details.
ASIC – extension of COVID financial advice relief
On 23 September 2020, the ASIC Corporations (Amendment) Instrument 2020/862 (Instrument) was registered on the Federal Register of Legislation. The Instrument extends the operation of the ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2020/355 to 15 April 2021, which provides ‘temporary relief measures to facilitate retail clients receiving timely and affordable financial product advice because of the adverse economic effects of the coronavirus’.
ASIC also extended the operation of its ‘temporary no-action position for expanded intra-fund advice on early release of superannuation relating to COVID-19’ to 31 December 2020.
In an associated media release, ASIC stated that the ‘financial advice relief and the no-action position for superannuation trustees providing ‘intra-fund advice’ aims to assist industry in providing consumers with affordable and timely advice during the COVID-19 pandemic’.
AFCA – complaints data update
On 23 September 2020, AFCA advised that the ‘AFCA Datacube’ now includes ‘information about all financial complaints lodged with it from 1 July 2019 to 30 June 2020’. The Datacube is a free tool that anyone can use to see how complaints are handled by financial firms. In relation to superannuation, AFCA notes that the data indicates that in the first half of the year there was a spike in complaints relating to early access to superannuation. However, the number of these complaints has decreased since 1 July as learnings from the first stage of the early release scheme were implemented.
Click here for details.
Legislation – Extension of electronic signatures and virtual meetings relief
On 22 September 2020, the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 was registered on the Federal Register of Legislation. It continues the effect of Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 which allows companies to:
- use electronic signatures for the purposes of execution of documents pursuant to the Corporations Act 2001 (Cth); and
- hold meetings required by the Corporations Act 2001 (Cth) virtually, rather than face-to-face.
This relief will expire on 22 March 2021.
Click here for details.
ASIC – Enforcement update
On 22 September 2020, ASIC published its enforcement update which sets out ASIC’s enforcement related activities in relation to the first six months of 2020. According to ASIC, it is prioritising Royal Commission case studies and misconduct related to superannuation and insurance as part of its enforcement approach. In relation to pandemic-related enforcement priorities guiding ASIC’s response to misconduct, one of the stated priorities includes addressing ‘egregious governance failures within corporations, schemes and superannuation funds’.
Click here and here for details.
Treasury – Exposure draft for sunsetting Income Tax Assessment Regulations 1997
On 21 September 2020, the Treasury released for public consultation exposure draft regulations and explanatory material for the draft Income Tax Assessment Regulations 2020. The existing Income Tax Assessment Regulations 1997 will sunset on 1 April 2021 and the Treasury is proposing to ‘remake and improve the operation of the 1997 Regulations by omitting redundant provisions, simplifying language and restructuring provisions for ease of navigation’. The 1997 Regulations include certain operational rules for income tax calculations and liabilities for individuals, companies, trusts, partnerships and superannuation funds.
The consultation period closes on 19 October 2020.
Click here for details.
AFCA – Proposed updates to rules
On 21 September 2020, AFCA released for public consultation two documents which propose some changes to its Rules and Operational Guidelines. According to AFCA, because the SCT will close at the end of this year, the Rules need to be amended to allow AFCA to consider:
- ‘any remaining complaints currently with the SCT [that] are unable to be finalised prior to the SCT ceasing operations’; and
- ‘any matters that are before the Federal Court on appeal from the SCT [that] are not finalised prior to [the] SCT ceasing operations and require remittal back to be determined again, or finalised in accordance with the Court’s directions’.
Two other ‘minor technical changes’ are also proposed.
The consultation period closes on 16 October 2020.
