Welcome to the latest issue of the KHQ Super Alert. This week, the Treasurer announced the appointment of APRA’s new Chair, Deputy Chair and two new Members, Parliament announced it would commence an inquiry into ASIC’s capacity and capability to undertake enforcement action, and the Federal Court released its decision in relation to AFCA’s authority when dealing with superannuation-related complaints directly against life insurers.
Treasury – APRA capability review
On 3 November 2022, Treasury released a consultation paper in relation to a review of ‘the effectiveness and capability of the Australian Prudential Regulation Authority’ which will be ‘a targeted assessment of its supervision and resolution functions, focusing on superannuation’, conducted for the first time by the Financial Regulator Assessment Authority. The consultation period closes on 15 December 2022.
Click here for details.
ASIC – 2023 Enforcement Priorities
On 3 November 2022, ASIC announced its enforcement priorities for 2023 to give ‘a clear indication of where [ASIC] will direct [its] resources and expertise’. ASIC Deputy Chair Sarah Court said, ‘[i]n the superannuation sector, [ASIC] will look to take action where we see instances of misleading conduct and poor governance’.
Relevantly for superannuation, specific priorities include:
- ‘[e]nforcement action targeting poor design, pricing and distribution of financial products’;
- ‘[m]isleading conduct in relation to sustainable finance including greenwashing’; and
- ‘[m]isconduct that involves misinformation through social media about investment products, including “finfluencer” conduct’.
According to ASIC, it has seen a 157% increase ‘in advisers who claim to provide ESG advice since 2016’, so it ‘will closely monitor for misleading conduct and claims of greenwashing that cannot be sustained, and take enforcement action where necessary’.
Click here or here for details.
Assistant Treasurer – Delay to financial adviser registration requirements
On 1 November 2022, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, issued a media release advising that the financial adviser registration requirement under the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021 would be delayed until 1 July 2023. Originally, it was proposed that ‘all financial advisers who provide personal advice to retail clients [needed to] be registered by 1 January 2023’.
Click here and here for details.
APRA – Deputy Chair Helen Rowell’s speech released
On 28 October 2022, APRA released Deputy Chair Helen Rowell’s speech, in which she gave a brief recap on APRA’s views on climate risks over the last few years, stating that ‘climate risks are distinctly “financial” in nature – and that many of these risks are foreseeable, material and actionable now’.
She commented on the need to create a common language between industries for disclosing climate risks and exposures to prevent ‘misinformation and the selective use of statistics’ which would undermine the ‘enhanced understanding’ sought by greater transparency.
Click here for details.
APRA – New Chair and Deputy Chair
On 28 October 2022, APRA issued a media release welcoming the Treasurer’s announcement that Deputy Chair John Lonsdale will commence the role of APRA Chair from 31 October 2022. Also from 31 October, current APRA Member Margaret Cole was appointed Deputy Chair and will remain responsible for APRA’s activities in the superannuation industry. Suzanne Smith and Therese McCarthy Hockey were appointed as APRA Members.
Mr Lonsdale said ‘APRA will remain focused on fulfilling its mandate and ensuring that Australia has a strong and resilient financial system. The Treasurer’s appointments provide a strong and capable set of APRA Members to protect Australian […] superannuation members’.
Click here or here for details.
Parliament – Inquiry into ASIC
On 28 October 2022, Parliament announced that the ‘Parliamentary Joint Committee on Corporations and Financial Services has commenced an inquiry into the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports or alleged misconduct’.
The terms of reference for the review include ‘the potential for dispute resolution and compensation schemes to distort efficient market outcomes and regulatory action’ and ‘the offences from which penalties can be considered and the nature of liability in these offences’.
The release iterated that ‘ASIC’s policies and systems for responding to reports of misconduct must be fair, transparent and serve the interests of the Australian community and the economy’.
Click here for details.
Federal Court – Appeal in relation to authority of AFCA
On 27 October 2022, the Full Court of the Federal Court of Australia, handed down its decision in MetLife Insurance Ltd v Australian Financial Complaints Authority Ltd [2022] FCAFC 173. This was an appeal from an earlier decision of the Federal Court in MetLife Insurance Ltd v Australian Financial Complaints Authority [2022] FCA 23 (see our 11 February 2022 Super Alert).
The Court overturned the previous decision, and found that AFCA did not have jurisdiction to hear complaints made directly against life companies when the complaint relates to life insurance in superannuation. In other words, a complaint against a decision of a life insurer about a product offered by a superannuation fund cannot be considered by AFCA if it is brought directly against the insurer. Instead, it must be brought jointly against the insurer and the superannuation trustee for AFCA to hear it.
Click here for details.
Parliament – Privacy legislation amendment Bill introduced to Parliament
On 26 October 2022, the Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 was introduced to Parliament. As mentioned in our 28 October 2022 Super Alert, this Bill will increase penalties for serious or repeated breaches of privacy laws.
Click here for details.
Treasury – Quality of Advice: Conflicted Remuneration Paper
This week, Treasury released a ‘Conflicted Remuneration Paper’ as part of the Quality of Advice Review. This paper ‘provides a high-level snapshot of the key findings from the data collected by the Review on general insurance and life insurance and puts forward a series of proposals for reform’.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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