SUPER ALERT – 3 SEPTEMBER 2021

Welcome to the latest issue of the KHQ Super Alert which follows another busy week of news. Treasury has released an additional Bill to support the FAR legislation, as well as a consultation on occupational exclusions for insurance associated with MySuper products. APRA’s Your Future, Your Super performance test results for MySuper products were released amid much publicity, and APRA also released the finalised version of prudential standard CPS 511 on remuneration.

KHQ Lawyers - Super Alert

Parliament – Bill passes in relation to family law and tax matters

On 2 September 2021, the Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 passed both Houses of Parliament and now awaits Royal Assent. The Bill amends the:

  • Family Law Act 1975 and Taxation Administration Act 1953 to create an information sharing mechanism to allow the family law courts to access certain superannuation information held by the [ATO] for the purpose of permitting family law proceedings’; and
  • Income Tax Assessment Act 1997 to ‘remove the requirement for superannuation trustees to provide an actuarial certificate when calculating exempt current pension income using the proportionate method, where all members of the fund are fully in the retirement phase for all of the income year’.

The Bill combines separate Treasury consultations which were referred to in our Super Alerts of 28 May 2021 and 4 June 2021.

Click here for details.

Treasury – Additional proposed FAR Bill

On 2 September 2021, Treasury released an exposure draft of the Financial Accountability Regime (Consequential Amendments and Transitional Provisions) Bill 2021. This Bill builds on the proposed introduction of the Financial Accountability Regime (FAR) to the superannuation industry as referred to in our Super Alert of 23 July 2021.

Among other things, the Bill proposes to amend the SIS Act to:

  • ‘ensure that the Regulator considers [FAR] in granting and imposing conditions on RSE licenses, by including [FAR] in the definition of RSE licensee law’;
  • ‘expand the obligations of auditors and actuaries to provide superannuation entities or the Regulator information when there is likely to have been a breach of the law, to situations in which there have been breaches of [FAR], by amending the definition of regulatory provision’;
  • ‘expand the ability for a court to disqualify an individual from being a superannuation trustee for breaching certain legislation to include breaches of [FAR]’;
  • ‘expand the ability for a court to order the disqualification of an individual from being an auditor or actuary for a superannuation entity for breaches of certain legislation, to include breaches of [FAR]’;
  • ‘expand the ability of APRA to direct the removal of an auditor or actuary for a superannuation entity, or direct a matter to an auditor or actuary’s professional organisation for breaches of certain legislation to include breaches of [FAR]’; and
  • ‘expand the ability of a court to stop the payment of money to protect certain creditors for certain breaches of legislation to include breaches of [FAR]’.

The consultation period closes on 17 September 2021.

Click here for details.

Treasury – Consultation in relation to occupational exclusions for insurance in MySuper products

On 2 September 2021, Treasury released a consultation paper in relation to ‘the appropriateness of occupational exclusions in default insurance in MySuper products’. According to Treasury, this review ‘will focus on default cover in respect of life and total and permanent disability insurance which trustees are required to provide to their MySuper members’, with the objective of considering ‘the extent of the problem arising from occupational exclusions for new members and for members changing jobs and what options, if any, may be required for changes to the current regulatory framework’. Voluntary cover and income protection will not form part of the review.

The consultation period closes on 14 October 2021.

Click here for details.

ASIC – Survey in relation to readiness for upcoming internal dispute resolution changes

On 2 September 2021, ASIC released the findings from a recent survey of trustees’ ‘preparedness for the new enforceable internal dispute resolution (IDR) obligations’ which commence on 5 October 2021. According to ASIC, the survey ‘identified some important areas requiring further work’ so ASIC has ‘engaged with individual trustees to understand in more detail the steps taken in their preparation’.

Click here for details.

APRA – Your Future, Your Super performance test

On 31 August 2021, APRA released the results from the first MySuper product performance test required under the Your Future, Your Super reforms. Out of the 76 MySuper products assessed by APRA, 13 products did not meet the requisite benchmark. (Some MySuper products were not assessed because they did not have at least 5 years of performance history.)

APRA has advised that trustees ‘of failed products are required to write to members by 27 September 2021 advising them of their Performance Test outcome [using the mandated template letter] and providing the details of the ATO’s YourSuper comparison tool’.

APRA released the quarterly MySuper statistics for the quarter ending June 2021 on the same day.

Click here and here for details.

Treasury – Draft legislation in relation to using technology to sign and send documents

On 30 August 2021, Treasury released exposure draft legislation in relation to making ‘permanent reforms to facilitate the use of technology in meetings, to execute documents and send meeting-related materials’. The Bill would allow ‘companies and their officers to use technology to satisfy Corporations Act 2001 requirements’.

The consultation period closes on 10 September 2021.

Click here for details.

Government – Temporary freeze for financial adviser levies

On 30 August 2021, the Government announced that it would temporarily reduce the cost recovery levies charged by ASIC for financial advisers. The Government has advised that the ‘freeze in the per adviser levy will provide financial advisers with the certainty they need over the next two years to deal with the impacts of COVID-19 and further regulatory reforms making their way through the Parliament, including the introduction of a Single Disciplinary Body and a Compensation Scheme of Last Resort’.

Click here for details.

APRA – Remuneration prudential standard released

On 27 August 2021, APRA released the final version of prudential standard CPS 511: Remuneration. A response paper was also released which explains that CPS 511 will require:

  • ‘entities to apply material weight to non-financial metrics (such as customer complaints, breaches, and regulatory and audit findings) when determining variable remuneration for employees’;
  • ‘entities to reduce variable remuneration, potentially to zero, when warranted by poor risk conduct’;
  • ‘new minimum deferral requirements for variable remuneration, coupled with malus and clawback provisions’; and
  • ‘increased board oversight, transparency and accountability on remuneration outcomes’.

For superannuation trustees, CPS 511 will come into effect on 1 July 2023 or 1 January 2024 depending on the size of the funds under management.

Click here for details.

KHQ Lawyers - Sanela Osmanovic

Sanela Osmanovic Senior Associate

Sanela is a Senior Associate in the superannuation & financial services team, and has a broad range of experience working with a range of superannuation fund trustees, superannuation administrators,... Read More

KHQ Lawyers - Natalie Cambrell

Natalie Cambrell Principal Solicitor

Natalie Cambrell leads our superannuation and financial services team.  With more than 20 years’ experience, she has an enviable reputation for her in-depth knowledge in these highly regulated and... Read More