Welcome to the latest issue of the KHQ Super Alert. This week, APRA released its 2021 Year in Review, while also setting out its policy and supervision priorities for the year ahead. ASIC also released findings from its review of the governance practices of selected responsible entities of managed investment schemes.
ASIC – Quarterly update released
On 3 February 2022, ASIC released its quarterly update for the October to December 2021 period. It includes a list of activities which ASIC took in relation to superannuation trustees such as ‘urging action on whistleblower policies’, releasing ‘updated information for employers and trustees on changes affecting the distribution of superannuation products’ and reminding trustee to check on default income protection insurance offered to members.
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ASIC – Federal Court penalty decision handed down
On 3 February 2022, ASIC issued a media release advising that the Federal Court had handed down a $6 million penalty to an AFSL holder ‘for failing to take reasonable steps to ensure that its authorised representative…provided appropriate financial advice, acted in his clients’ best interests and put clients’ interests ahead of his own’. This penalty decision was handed down as a result of the Federal Court’s earlier decision in Australian Securities and Investments Commission v RI Advice Group Pty Ltd (No 2) [2021] FCA 877, as referred to in our Super Alert of 6 August 2021.
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Legislation – Family law instruments deferred
On 2 February 2022, the Legislation (Deferral of Sunsetting—Family Law Instruments) Certificate 2022 was registered on the Federal Register of Legislation. This certificate ‘defers the sunsetting date of the Family Law (Family Dispute Resolution Practitioners) Regulations 2008, Family Law Regulations 1984, and Family Law (Superannuation) Regulations 2001 by 12 months from 1 April 2023 to 1 April 2024’. This deferral has been put in place to ‘allow sufficient time for further consultation [with the Australian Law Reform Commission’s inquiry into the family law system] and the replacement instruments to be made’.
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APRA – APRA’s policy and supervision priorities released
On 1 February 2022, APRA released its ‘policy and supervision priorities for the next 12 to 18 months’. APRA’s revised priorities include ‘a heightened emphasis on new and emerging financial risks, practices and business models that are testing traditional regulatory boundaries and supervisory practices’.
APRA’s other policy priorities for 2022 include:
- ‘improving crisis preparedness, including finalising two new prudential standards on contingency and resolution planning’; and
- ‘strengthening core requirements for strategic planning and member outcomes in superannuation, to align with and reinforce the Government’s Your Future, Your Super reforms’.
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ASIC – Findings from MIS governance review released
On 31 January 2022, ASIC ‘released findings from [its] high-level review of the governance practices of 10 large responsible entities of managed investment schemes’. ASIC’s presentation ‘sets out important considerations regarding governance for the responsible entities and their boards’. ASIC therefore ‘encourages all responsible entities to consider the review findings and take steps to evaluate and improve their governance practices’.
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APRA – Annual superannuation bulletin released
On 31 January 2022, APRA released its annual superannuation bulletin, which ‘provides an overview of the superannuation industry’ for the financial year ending 30 June 2021. APRA notes that it has implemented a ‘streamlined presentation’ of the bulletin, with it now being ‘split into three files, each containing industry aggregates’. The three files are:
- ‘The superannuation entities file [which] contains data on superannuation entities at an industry aggregate level’ and ‘includes data relating to fund profile, performance membership and insurance, as well as defined benefit sub-funds’;
- ‘The MySuper file [which] contains detailed profile and performance data at an industry aggregate level relating to MySuper products’; and
- ‘The licensees file [which] contains data relating to [RSE] licensees’ and ‘contains profile, total assets under management and directorships at an industry aggregate level’.
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APRA – 2021 Year in Review released
On 28 January 2022, APRA released its 2021 Year in Review. The Review ‘outlines how APRA continued responding to the [COVID-19 pandemic], while pushing ahead with important reforms aimed at reinforcing the stability of the Australian financial system’.
Relevantly for trustees, the Review notes (among other things) that:
- despite ‘lockdowns and state and territory border closures’ and the ‘severe adverse impact on many businesses…APRA-regulated superannuation funds were able to deliver higher-than-average returns to their members’;
- ‘APRA plans to roll out the [risk culture survey] to…40 regulated entities across the insurance and superannuation sectors in 2022’;
- APRA will focus on ‘implementing the Government’s Your Future, Your Super reforms’ and ‘helping to find solutions to important challenges, such as superannuation retirement income products’; and
- ‘concentration within the superannuation industry also increased over the year, with the five largest super funds holding 32 per cent of total APRA-regulated super assets as at 30 June 2021, up from 27% five years ago’.
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