Welcome to the latest issue of the KHQ Super Alert. The regulators have provided a variety of news updates this week, including an ASIC consultation paper on consumer remediation, the publication of a new issue of APRA Insight and an information sheet which explains the proposed AFSL requirements for entities providing insurance claims handling services.
ASIC – Review of occupational classification practices in insurance
On 3 December 2020, ASIC issued a media release in relation to its review of default occupational categories in life insurance held through superannuation. According to ASIC, trustees can improve member outcomes and better meet legal obligations by ensuring that:
- ‘effort is made, through engagement with members and employers, to gather better occupation data about individuals and cohorts so that default settings are based on appropriate statistical assumptions and are fair and reasonable’;
- ‘occupational default labels are meaningful, promote understanding of the level of risk and associated cost of the category, and trustees take prompt action to address any mis-categorisation’; and
- ‘disclosures clearly state:
- a member’s occupational category,
- the meaning of the category,
- the cost of the insurance in that category, and
- whether the member may be eligible for an alternative category that is less expensive or provides a greater level of cover;
- members can easily amend their profile so that premiums are charged based on accurate information’.
Click here for details.
ASIC – Review of remediation guidance
On 3 December 2020, ASIC released consultation paper CP 335 ‘Consumer Remediation: Update to RG 256’ for public consultation. RG 256 ‘Client review and remediation conducted by advice licensees’ sets out ASIC’s guidance in relation to the review and remediation conducted by AFSL holders who provide personal advice to retail clients. CP 335 explains ASIC’s proposed updates to this regulatory guide. According to ASIC, while it ‘has seen some good practices by licensees, [ASIC has] also seen many remediations caused – or blown out – by ongoing systems failures, ultimately resulting in significant costs to licensees and further harm to consumers’. The purpose of CP 335 is to give ‘industry and stakeholders the opportunity to provide feedback about the challenges they face in designing and executing remediations’.
ASIC has also released a document called ‘Making it Right: how to run a consumer centred remediation’, which ‘offers immediate help to licensees with the day-to-day design and execution of consumer-centred remediations. This customer-centred field guide draws on ASIC’s on-the-ground experience with remediations and lessons from behavioural science’.
Submissions in relation to CP 335 close on 26 February 2021.
Click here for details.
Parliament – WA Family Law Bill passed
On 3 December 2020, the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Bill 2020 was passed by both Houses. As outlined in our Super Alert of 13 November 2020, the Bill proposes to:
- ‘give effect to a referral of power from Western Australia to the Commonwealth in respect of superannuation matters in family law proceedings for separating de facto couples in Western Australia’; and
- ‘extend federal bankruptcy jurisdiction to the Family Court of Western Australia to hear bankruptcy proceedings concurrently with family law proceedings, where appropriate’.
Click here for details.
APRA – New issue of Insight
On 2 December 2020, APRA published issue four of its quarterly newsletter for 2020. Two articles which are relevant to superannuation trustees are:
- ‘The superannuation Early Release Scheme: Insights from APRA’s Pandemic Data Collection’ which sets out in detail how the Early Release Scheme has impacted funds and member outcomes; and
- ‘Superannuation: How a skills matrix can help transform board capability’ which explains how best-practice boards used a strong skills matrix to achieve better outcomes.
Click here for details.
ASIC – Insurance claims handling information sheet
On 27 November 2020, ASIC released a draft information sheet in relation to insurance claims handling and settling. The information sheet relates to the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 which is currently before the House of Representatives. The Bill proposes to amend the Corporations Act so that insurance claims handling and settling is deemed to be a financial service which will require an AFSL.
ASIC has released the information sheet in draft to ‘give industry participants as much time as possible to consider whether they need to obtain (or vary)’ an AFSL. The draft information sheet:
- ‘sets out who needs to be authorised to provide claims handling and settling services for insurance products and who can act on an AFS licensee’s behalf’;
- ‘explains how and when to apply for an AFS licence, or variation to an existing AFS licence, including materials that are needed to support an application’; and
- ‘refers to existing regulatory guidance on how to meet the general obligations under section 912A of the Act, and indicates how the obligations may be tailored to claims handling’.
Click here for details.
ASIC – Financial Reporting Obligations Time Extension
On 25 November 2020, the ASIC Corporations (Amendment) Instrument 2020/1080 was registered on the Federal Register of Legislation. This instrument extends the relief provided in ASIC Corporations (Extended Reporting and Lodgment Deadlines – Unlisted Entities) Instrument 2020/395 for various entities to lodge their financial reports and audits. For example, financial services licensees with a ‘financial year that ends between 31 December 2019 and 31 March 2020’ now have until 7 January 2021 to lodge information such as profit and loss statements and balance sheets for the relevant period.
Click here for details.
ASIC – Regulatory costs instruments registered
On 24 November 2020, the ASIC (Supervisory Cost Recovery Levy—Regulatory Costs) Instrument 2020/1074 and ASIC (Supervisory Cost Recovery Levy—Annual Determination) Instrument 2020/1073 were registered on the Federal Register of Legislation. The two instruments specify:
- ‘ASIC’s regulatory costs and their attribution to each industry sub-sector for the 2019-20 financial year’; and
- ‘certain matters about [the] size and composition of ASIC’s regulated population and of the metrics that apply to each industry sub-sector within that regulated population for the 2019-20 financial year’.
