Welcome to the latest issue of the KHQ Super Alert which is being sent out on a Monday due to the Victorian public holiday last week. The key news item from last week relates to the Treasury’s release of exposure draft legislation proposing a number of changes to the SIS Act and regulations in relation to the MySuper fee charging rules, insurance elections and COVID early release rules.
ASIC – annual report
On 23 October 2020, ASIC published its annual report for the 2019/20 financial year. In relation to superannuation, ASIC advised that it in the past year it had:
- ‘focused on conduct that contributes to potential member harm, as well as on promoting better member outcomes in the implementation of reforms such as [the] ‘Protecting Your Superannuation Package’; and
- worked ‘with the ATO and [ACCC]…[to identify] financial advisers, trustees, fund promoters and unlicensed providers running marketing campaigns based around the provision of ‘free’ lost superannuation search and consolidation services…[which] can benefit consumers, [but] if not done appropriately it can lead to the loss of valuable insurance and the payment of higher fees’.
Click here for details.
Treasury – exposure draft legislation for SIS Act amendments
On 21 October 2020, Treasury released exposure draft legislation and regulations to make miscellaneous amendments to various financial services laws. In relation to superannuation specifically, the Treasury Laws Amendments (Measures For A Later Sitting) Bill 2020: Minor And Technical Amendments Bill proposes to amend:
- the ‘MySuper charging rules in section 29VA(9) of the [SIS Act] to allow the trustee of a fund who offers a MySuper product to charge a greater number of differentiated investments fees to the different subclasses of members who hold the MySuper product’;
- ‘the [SIS Act] to allow elections regarding the provision of insurance under sections 68AAA, 68AAB and 68AAC of that Act to remain in force…when undergoing successor fund transfers’;
- the definition of ‘member or beneficiary report’ in section 105(3)(a) of the SIS Act as the legislative reference is outdated;
- ‘[s]ection 20QA(1)(a)(ix) of the Superannuation Unclaimed Money and Lost Member Act 1999…to provide that an account is not an ‘inactive low balance account’ if the member has elected to maintain insurance on that account under section 68AAB(2) of the [SIS Act]’, with retrospective application from 1 April 2020; and
- ‘[s]ection 295-495 of the Income Tax Assessment Act 1997…to confirm that a superannuation fund or RSA provider cannot claim a deduction for a payment to a person under an income stream because of the person’s temporary inability to engage in gainful employment’.
The associated Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2020 propose to amend the SIS Regulations to ‘ensure that permanent residents of New Zealand are eligible for early release of their superannuation’ under the COVID early release scheme. This amendment will have retrospective effect from 25 March 2020.
Public submissions to this Bill and other related materials is now open. The consultation period will close on 17 November 2020.
Click here for details.
Treasury – exposure draft legislation for electronic document execution
On 19 October 2020, Treasury released for public comment an exposure draft Bill which ‘makes permanent changes to the Corporations Act 2001 in relation to virtual meetings and electronic document execution’. The Corporations Amendment (Virtual Meetings And Electronic Communications) Bill 2020 proposes to (amongst other things) amend section 127 of the Corporations Act to make the law ‘relating to the execution of company documents technology neutral’. The Explanatory Memorandum to the Bill explains that these changes ‘apply to documents executed without a common seal, documents executed with a common seal and deeds’.
The consultation period will close this week on 30 October 2020.
Click here for details.
AFCA – cessation of temporary time extension to consider complaints
On 16 October 2020, AFCA issued a media release in relation to the temporary measure which allowed financial firms ‘an extra 9 days to respond to complaints that have already been through the firm’s internal dispute resolution process, taking the total time to respond from 21 days to 30 days’. AFCA has reminded financial firms that the time extension will cease on 1 November and that ‘AFCA’s process will revert to the original response timeframes, giving financial firms 21 days to respond to financial difficulty complaints and complaints that have already been through internal dispute resolution’.
Click here for details.
