Welcome to the latest issue of the KHQ Super Alert. In a busy week, the Attorney-General’s Department issued further consultation materials on proposed reforms to the AML/CTF regime. ASIC announced a review of death benefit claims handling and the ATO released a new successor fund transfer reporting form.
ASIC – Speech about greenwashing
On 2 May 2024, ASIC published a speech delivered by its Chair, Joe Longo, in relation to greenwashing and climate-related disclosures (see our Super Alert of 26 April 2024 for a separate speech delivered by Mr Longo last week about climate-related disclosures).
Mr Longo emphasised that ‘[g]reenwashing is simply a recent manifestation’ of the prohibition against misleading and deceptive conduct. In relation to ASIC’s recent Federal Court greenwashing proceedings, Mr Longo noted that ‘ASIC is not in the business of pursuing entities that honestly and accurately disclose their activities… [only] those who…carelessly give inaccurate or misleading statements’ and that ‘where statements are made in marketing and promotional campaigns, with little or no substance to back them up, [ASIC] will ask questions’.
In particular, Mr Longo gave an example of responsible entities ensuring they ‘deliver on the representations they make’ as ASIC has ‘seen instances of investments made by delegated portfolio managers that do not align with the responsible entities’ representations to investors’.
Click here for details.
Attorney-General’s Department – Proposed reforms to AML/CTF rules
On 2 May 2024, the Attorney-General’s Department commenced consultation in relation to proposed reforms to the AML/CTF regime. The key purpose of the reforms is to extend the application of the rules to a wider range of businesses (eg, real estate agents and lawyers). However, there are also ‘proposed measures to simplify and clarify the regime’ in order ‘to replace the current prescriptive AML/CTF program and Customer Due Diligence (CDD) requirements with clear, risk-based and outcomes-focused obligations’.
The consultation period closes on 13 June 2024.
In an associated media release, AUSTRAC announced that the first round of consultations ‘identified broad support for the reforms’. See our Super Alert of 21 April 2023 for further background information about the initial consultation paper.
Click here and here for details.
ASIC – Review of death benefit claims handling
On 1 May 2024, ASIC announced that it has commenced ‘a review of industry practices and compliance with laws relating to member services, focussing initially on how trustees handle death benefits claims’. It reviewed 22 fund websites for their ‘communications and resources about death benefit nominations and how to make a death benefit claim’.
The following observations were noted:
- ‘three websites did not have any content that explained the importance of making a [death benefit] nomination’;
- ‘[m]ost beneficiary nomination forms…did not include sufficient information to assist the member to understand how to make a nomination…[trustees] omitted crucial details…such as definitions of dependants, what might make a nomination invalid, and/or statements that members should review their nomination if circumstances change’;
- ‘reversionary beneficiary nominations [information]…often failed to flag important additional considerations relevant to this type of nomination (i.e. transfer balance cap and Centrelink implications)’; and
- ‘[i]nformation…tended to be drafted in a complex, technical manner’ which is concerning to ASIC ‘[a]s approximately half (44%) of Australian adults have a reading level below year 11’.
ASIC also called out that ‘complaints to AFCA about trustees’ delays in handling death benefits claims increased sevenfold between 2021 and 2023’.
Click here for details.
Federal Court – Decision in relation to section 912A
On 29 April 2024, the Federal Court published its decision in Australian Securities and Investments Commission v Macquarie Bank Limited [2024] FCA 416. While the case does not concern a superannuation fund, it provides a useful discussion about the meaning of providing financial services ‘efficiently, honestly and fairly’ for the purposes of section 912A of the Corporations Act and recent cases considering the provision.
Macquarie Bank consented to the declaration that it contravened this provision by ‘not implementing effective controls to prevent or detect transactions conducted by third parties through Macquarie’s bulk transacting system that were outside the scope of the authority conferred on them that only permitted them to withdraw their fees from their clients’ Cash Management Accounts’.
Click here for details.
ASIC – Guidance to assist First Nations consumers
On 29 April 2024, ASIC announced that it has prepared a document to assist entities with ‘identifying and supporting First Nations consumers experiencing financial abuse’. The document was prepared following a financial services industry workshop on 14 March 2024 and outlines various mattes for financial service providers to consider in order to provide ‘tailored and culturally responsive approaches for First Nations customers’.
Click here for details.
APRA – Notes from CEO roundtable with ASIC
On 26 April 2024, APRA released the high-level notes from the superannuation CEO roundtable event held jointly with ASIC on 27 March and 28 March 2024. The regulators advised that 20 trustees and executives attended and the discussion focused on ‘resilient and member-focused fund operations’. In particular, APRA explained that it is focused on uplifting the ‘operational resilience’ of trustees and the introduction of FAR and CPS 230 ‘will strengthen trustees’ ability to swiftly respond in times of stress’.
A common challenge ‘identified by trustees was the receptiveness of service providers in responding to revised requirements driven by regulatory changes…[and the] different approaches to regulatory requirements that can hinder collaboration’. Funds are ‘considering the potential benefits and challenges of maintaining outsourced administration or moving some or all of these functions in-house’.
Click here for details.
Legislation – Regulations registered correcting SIS Regulations
On 24 April 2024, the Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2024 were registered on the Federal Register of Legislation. These regulations make minor amendments to the SIS Regulations to update cross-references to other legislation and remove redundant provisions. See our Super Alert of 2 February 2024 for information about the Treasury consultation earlier this year in relation to these regulations.
Click here for details.
ATO – SFT notification form released
On 23 April 2024, the ATO updated its ‘Successor and intra fund transfer reporting’ online guidance to include links to a new online form for trustee to complete to notify the ATO of a successor fund transfer. The ATO has encouraged trustees and their administrators to engage with the ATO early by lodging the information requested in the form as soon as possible after a trustee starts considering a transfer.
Click here and here for details.
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