Welcome to the latest issue of the KHQ Super Alert. This week several outstanding Royal Commission recommendations, including the ban on advice fees from MySuper products and the Bill relating to the closure of ERFs, were passed by Parliament. Treasury announced that a review of AFCA will commence (as required by the relevant legislation) and the ‘Your Future, Your Super’ Bill was referred to a Senate committee for inquiry.
Parliament – Two superannuation Bills passed
On 25 February 2021, the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 was passed by both Houses. As referred to in our Super Alert of 11 December 2020, the Bill implements four Royal Commission recommendations. These are:
- amending ‘the Corporations Act to require financial services providers that receive fees (fee recipients) under an ongoing fee arrangement to:
- provide clients with a single document each year which outlines the fees that will be charged and the services which the client will be entitled to in the following 12 months and which seeks annual renewal from clients for all ongoing fee arrangements; and
- obtain written consent before fees under an ongoing fee arrangement can be deducted from a client’s account’ (date of effect: 1 July 2021);
- amending ‘the Corporations Act to require…a financial services licensee or authorised representative [who is not acting independently]…to give a written disclosure of lack of independence where they are authorised to provide personal advice to a retail client’ (date of effect: 1 July 2021); and
- amending ‘the SIS Act to provide greater protection for superannuation members against paying fees for no service…[by increasing] the visibility of advice fees for all superannuation products and prohibit[ing] the charging of ongoing advice fees from MySuper products’ (date of effect: 1 July 2021, with a 12-month transitional period commencing 1 July 2021 for arrangements entered into before 1 July 2021).
The Treasury Laws Amendment (Reuniting More Superannuation) Act 2021 was passed on the same day by the House of Representatives after it considered and approved several Senate requested amendments. The purpose of this Bill is ‘to facilitate the closure of eligible rollover funds by 30 June 2021 and allow the [ATO] to reunite amounts [they receive] from eligible rollover funds with a member’s active account’’.
The additional Senate amendments:
- defer the commencement date of the various measures as announced in the Federal Budget (see our Super Alert of 24 July 2020); and
- provide for additional circumstances under the Superannuation (Unclaimed Money and Lost Members) Act 1999 in which:
- the ATO must make payments to members; and
- trustees can voluntarily pay amounts to the ATO.
Click here for details.
Treasury – Review of AFCA
On 19 February 2021, Treasury opened an independent review into the operation of AFCA. The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Act 2018 ‘requires the Minister to establish an independent review of AFCA…[and] to table the review report in the Parliament within 15 sitting days after receiving the report’.
Treasury has released the terms of reference for the review, and public submissions close on 26 March 2021.
Click here for details.
ATO – Webinars for large super funds
On 19 February 2021, the ATO issued a reminder to trustees that it runs ‘webinars to help you with your superannuation reporting and compliance obligations’. The next webinar is in the first week of March and will relate to the indexation of the transfer balance cap.
Click here for details.
Parliament – ‘Your Future, Your Super’ Bill
On 18 February 2021, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 was referred to the Senate Economics Legislation Committee. The Committee is required to provide a report in relation to the Bill by 22 April 2021.
Click here for details.
