Super Alert 5 August 2022: APRA climate risk survey results, proposed amendments to SPS 515, Bill re downsizer contributions

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Posted By and on 5/08/22 at 2:38 PM

Welcome to the latest issue of the KHQ Super Alert. This week APRA released the results of its survey into climate risk practices at APRA-regulated entities, as well as proposed amendments to SPS 515. Meanwhile, Parliament considered a Bill which proposes to reduce the eligibility age for downsizer contributions to age 55.

APRA – Survey results in relation to climate risk practices

On 4 August 2022, APRA published an information paper in relation to a ‘voluntary climate risk self-assessment survey’ which was conducted earlier this year for 64 APRA-regulated entities. The survey results provide ‘provides insights into the alignment of climate risk practices by medium-to-large APRA-regulated institutions with the expectations set out in [Prudential Practice Guide CPG 229 Climate Change Financial Risks (CPG 229)]’.

According to the survey results:

  • ‘four out of five boards oversee climate risk on a regular basis, while just under two-thirds of institutions (63 per cent) have incorporated climate risk into their strategic planning process’;
  • ‘almost 40 per cent of institutions said climate-related events could have a material or moderate impact on their direct operations’;
  • ‘nearly three-quarters of institutions (73 per cent) said they had one or more climate-related targets in place, however 23 per cent of institutions do not have any metrics to measure and monitor climate risks’; and
  • ‘over two-thirds of institutions (68 per cent) said they have publicly disclosed their approach to measuring and managing climate risks, with 90 per cent of those aligning their disclosure to the Taskforce for Climate-related Financial Disclosures (TCFD) framework’.

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Parliament – Bill in relation to downsizer contributions

On 3 August 2022, the Treasury Laws Amendment (2022 Measures No. 2) Bill 2022 was introduced to the House of Representatives. Amongst other things, the Bill proposes to amend the Income Tax Assessment Act 1997 (Cth) ‘to allow individuals aged 55 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their main residence’.

Click here for details.

APRA – Speech by Margaret Cole

On 3 August 2022, APRA published a speech delivered by its executive board member Margaret Cole in relation to her past 12 months in the role. Comments made by Ms Cole include:

  • APRA’s corporate plan will be released next week which sets out ‘APRA’s strategic objectives for the next four years’;
  • APRA will be ‘closely monitoring those products required to close to new members [as a result of a second performance test fail] through a targeted data collection to ensure trustees are meeting these requirements of the law’;
  • ‘the optimal size of the [superannuation] industry remains a fair distance from where we are now’ with ‘105 [of a total 145 APRA-regulated funds] collectively [managing] less than 9 per cent of assets’; and
  • ‘APRA and [ASIC] have commenced an initial review of [the recently published retirement income] strategies with…[an intention] to publish examples of better practice to assist industry to continue to evolve and strengthen its role of supporting their members in this phase of their superannuation journey’.

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ASIC – Guidance in relation to Financial Services and Credit Panel

On 3 August 2022, ASIC released the following materials in relation to the Financial Services and Credit Panel (FSCP):

  • updates to Regulatory Guide 263 Financial Services and Credit Panel; and
  • new Information Sheet 273 FSCP decisions: Your rights.

The purpose of the new Information Sheet is to outline ‘the rights of financial advisers affected by an FSCP decision, including how to make an application to vary or revoke FSCP decisions and how to seek an independent review of FSCP decisions’.

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ATO – Guidance in relation to government engagement for innovative retirement income stream products

On 2 August 2022, the ATO published an article titled ‘Cross-agency process for innovative retirement income stream products’. The article explains how the ATO, APRA, ASIC and the Department of Social Services will together assist trustees ‘to raise topics or issues arising from certain innovative retirement income stream products with the government agencies responsible for regulating these products and the entities that provide them’. Although this process ‘streamlines the request process and discussions’, it ‘does not replace existing processes within each agency’ and ‘information and guidance provided by each agency will differ depending on their regulatory responsibilities and powers’.

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APRA – Proposed amendments to SPS 515

On 1 August 2022, APRA released a discussion paper in relation to ‘proposed enhancements’ to Prudential Standard SPS 515 Strategic Planning and Member Outcomes given ‘the pace of change in the industry and its regulatory and legislative settings’. APRA proposes to vary SPS 515 (and the accompanying prudential guides SPG 515 Strategic and Business Planning and SPG 516 Business Performance Review) with the following amendments:

  • ‘strengthened requirements to ensure trustees deliver quality outcomes to all cohorts of members in a more measurable way’;
  • ‘increased board oversight of financial projections and closer monitoring and management of financial resources in an integrated way that better reflects their risk profile, and nature of their business’; and
  • ‘ensuring timely action is taken to address areas of underperformance including transferring members to better performing products or funds’.

Submissions on the discussion paper close on 11 November 2022.

Click here for details.

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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

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Natalie Cambrell Director

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