Super Alert – 30 September 2022: ASIC regulatory guide for customer remediation, AUSTRAC threat report for super industry


Posted By and on 30/09/22 at 1:57 PM

Welcome to the latest issue of the KHQ Super Alert. This week, ASIC released a new regulatory guide for consumer remediation, AUSTRAC issued an updated threat report for the superannuation industry, and the Federal Court handed down judgements in two proceedings brought by ASIC.

Treasury – Review of ASIC industry funding model

On 28 September 2022, Treasury released for public consultation a discussion paper for the review of ASIC’s industry funding model (Review). As referred to in our Super Alert of 12 August 2022, Treasury had released the terms of reference for this review in early August. The purpose of the discussion paper is ‘to seek stakeholder views on options, examples of potential changes and questions that are designed to examine and address a range of issues set out in the Review’s Terms of Reference’.

The consultation period closes on 28 October 2022.

Click here for details.

ASIC – Regulatory guide for consumer remediation released

On 27 September 2022, ASIC released Regulatory Guide 277 Consumer remediation (RG 277) and an updated version of the ‘best practice field guide’ Making it right: How to run a consumer centred remediation. RG 277 will replace Regulatory Guide 256 Client review and remediation conducted by advice licensees. Remediations initiated on or after the issue date of RG 277 (27 September 2022) need to be conducted in a manner consistent with RG 277.

According to ASIC, RG 277 (among other things):

  • ‘clarifies the nine principles for conducting a remediation, which will help licensees comply with their obligations and conduct remediations efficiently, honestly and fairly;
  • provides 28 examples to assist in the practical application of the guide;
  • introduces guidance on the use of assumptions;
  • introduces updated product specific guidance on possible monetary and non-monetary remedies;
  • updates guidance on the use of a low value compensation threshold and payment channels; and
  • introduces guidance on what to do if a consumer cannot be contacted or paid.’

Click here for details.

AUSTRAC – Release of threat update report for superannuation

On 26 September 2022, AUSTRAC published a threat update report for the superannuation industry. The purpose of the report is ‘to update the existing superannuation risk assessment and examine current threats faced by the sector’. This report ‘provides a detailed overview of the current criminal threat environment facing the sector, including notable shifts and emerging risks’, and is related to the 2016 superannuation sector risk assessment.

Click here for details.

ASIC – Federal Court penalises licensee for charging fees for no service

On 20 September 2022, ASIC issued a media release in relation to the Federal Court’s decision in Australian Securities and Investments Commission v AMP Financial Planning Proprietary Limited [2022] FCA 1115. According to ASIC, the Federal Court has ordered a total of $14.5 million in penalties to be paid in relation to 1,452 superannuation members who were charged fees for services that were not provided.

The Federal Court found that although the licensee had remediated affected customers, they had ‘failed to investigate whether or not there was a systemic issue, despite many complaints over a lengthy period of time’ and the licensee had ‘breached its obligations…to act efficiently, honestly and fairly and to comply with financial services laws’. In handing down the judgment, Justice Moshinsky commented on the entity’s corporate culture in relation to systemic contraventions over a period of time.

ASIC Deputy Chair Sarah Court commented that ‘trustees should treat the penalty imposed today as an important reminder to maintain robust internal governance and assurance arrangements. Trustees are responsible for ensuring they only deduct fees from member accounts for services actually provided. If they fail in this obligation, they could face significant penalties’.

Click here for details.

ASIC – Federal Court penalises licensee for breaches of best interest obligations

On 19 September 2022, ASIC issued a media release in relation to the Federal Court’s findings in

Australian Securities and Investments Commission v Dixon Advisory & Superannuation Services Ltd [2022] FCA 1105. The Federal Court found that ‘six representatives failed to act in their clients’ best interests and failed to provide advice appropriate to their clients’ circumstances’ when they advised ‘clients to acquire, roll-over or retain interests in the US Masters Residential Property Fund’. The Federal Court determined to hand down a $7.2 million penalty.

Justice McEvoy found ‘[t]here is no evidence that the representatives conducted the necessary reasonable investigations into the recommended financial products or any alternative financial products, nor is there evidence that they considered the personal circumstances of the clients’.

Click here for details.

Legislation – Western Australia de facto family law superannuation splitting commences

On 19 September 2022, the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Commencement Proclamation 2022 (Cth) was registered on the Federal Register of Legislation. Under the proclamation, the Governor-General fixed 28 September 2022 as the date the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020 would commence. As referred to in our Super Alerts of 14 April 2022 and 26 August 2022, the result of this proclamation is that the Family Court of Western Australia will now have ‘federal jurisdiction to deal with the superannuation interests of separating de facto couples’.

Click here for details.

Parliament – Disallowance motion of annual members’ meeting notice regulations postponed

On 6 September 2022, Senator David Pocock issued a notice that he intends to move for the disallowance of the Superannuation Industry (Supervision) Amendment (Annual Members’ Meetings Notice) Regulations 2022 (see our Super Alert of 16 September 2022). This motion has been postponed to 25 October 2022.

Click here for details.

This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).

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KHQ Lawyers - Sanela Osmanovic

Sanela Osmanovic Senior Associate

Sanela is a Senior Associate in our Superannuation & Financial Services team, and has a broad range of experience working with a range of superannuation fund trustees... Read More

KHQ Lawyers - Natalie Cambrell

Natalie Cambrell Director

Natalie leads our Superannuation & Financial Services team. With more than 25 years’ experience, she has an enviable reputation for her in-depth knowledge in these highly regulated and complex... Read More