Welcome to the latest issue of the KHQ Super Alert. It has been a busier week this week. The FAR Bills were amongst numerous Bills passed by both Houses of Parliament that now await Royal Assent. Meanwhile, Treasury began consultation on two Bills to legislate the objective of superannuation.
Parliament – Legislation passed to implement minor ALRC recommendations
On 7 September 2023, the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023 passed both Houses of Parliament and now awaits Royal Assent. This Bill makes various minor changes to the Corporations Act and the SIS Act to implement minor recommendations identified by the Australian Law Reform Commission (see our Super Alert from 16 June 2023).
Click here for details.
Parliament – Legislation passed to recognise the experience of financial advisers
On 6 September 2023, the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 passed both Houses of Parliament and now awaits Royal Assent. This Bill contains two minor amendments to the Corporations Act and the SIS Act relating to financial advisers and the First Home Super Saver Scheme (see our Super Alert from 16 June 2023).
Subsequently on 7 September 2023, the Assistant Treasurer and Minister for Financial Services issued a media release announcing the passing of this legislation.
Click here and here for details.
APRA – CPS 511 pre-implementation review
On 6 September 2023, APRA issued a letter to all APRA-regulated entities outlining the findings from its review of how entities are approaching the implementation of Prudential Standard CPS 511 Remuneration (CPS 511). APRA’s review focused on the key requirements in CPS 511 being ‘remuneration framework, governance, design and consequence management’.
According to the letter, APRA was comfortable with the progress entities have made to implement CPS 511. In relation to the design of the remuneration frameworks, APRA encouraged entities to consider the following gaps it identified in the review:
- ‘limited progress implementing controls to manage potential conflicts arising from compensation arrangements of third-party service providers’;
- ‘inadequate understanding of how selected non-financial measures (NFMs) will drive desired behaviour, risk outcomes and performance’; and
- ‘insufficient rigour in the proposed processes to ensure remuneration consequences result from poor risk management outcomes’.
Click here for details.
Parliament – FAR Bills
On 5 September 2023, the Financial Accountability Regime Bill 2023 (FAR Bill) and the Financial Accountability Regime (Consequential Amendments) Bill 2023 passed both Houses of Parliament and now await Royal Assent. As mentioned in our Super Alert from 10 March 2023, these Bills were re-introduced to Parliament on 8 March 2023. No amendments were made to the Bills between being re-introduced and being passed.
In a media release issued on the same day, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, said of the financial accountability regime, ‘[t]he FAR ensures that these [financial] institutions clearly identify individuals who will be held accountable for the actions of the organisation. An executive who breaches these obligations can be penalised with a loss of income, disqualification from working in the sector, and individual civil penalties for assisting in the organisation’s contravention of its obligations’.
Click here, here and here for details.
Parliament – Legislation to simplify corporations law passed
On 4 September 2023, the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023 passed both Houses of Parliament and is now awaiting Royal Assent. This Bill amends various pieces of legislation to allow the use of modern technology in certain circumstances (see our Super Alert from 25 November 2022).
In terms of amendments to the SIS Act, the refinements are generally very minor, but they include some changes to clarify that the licensee of a registrable superannuation entity can use technology to hold annual members’ meetings.
Click here for details.
APRA – Review of trustees’ treatment of private equity asset
On 4 September 2023, APRA issued a letter to all RSE licensees outlining the findings of ‘a targeted review of unlisted asset valuation governance’. RSE licensees invested in the private equity technology company Canva Pty Ltd (Canva) had their governance practices reviewed by APRA to allow APRA to ‘assess compliance with APRA’s unlisted asset valuation governance requirements and expectations’.
According to APRA, it ‘assessed the majority of [relevant] RSE licensees’ governance practices related to their valuation of Canva as appropriate’, noting several areas of improvement. APRA called on RSE licensees to ‘understand their responsibilities and display effective ownership of their investment governance framework’ in order to meet their obligations under Superannuation Prudential Standard SPS 530 Investment Governance.
Click here for details.
ATO – Section 20C notices to be issued
On 4 September 2023, the ATO informed that the ‘section 20C notices’ (relating to unclaimed superannuation of former temporary residents) for the period from 1 January 2023 to 30 June 2023 will be issued from 1 September 2023 and will be due 31 October 2023.
Click here for details.
Treasury – Consultation on Bills legislating the objective of superannuation
On 1 September 2023, Treasury released for consultation two exposure draft Bills in relation to legislating the objective of superannuation (see our Super Alert from 24 February 2023 in relation to the earlier consultation paper released by Treasury). The Superannuation (Objective) Bill 2023 (Objective Bill) proposes to enshrine ‘the objective of superannuation in legislation’ and will require ‘policy-makers to assess future changes to superannuation legislation for compatibility with this objective… unless an exception applies’.
The Superannuation (Objective) (Consequential and Transitional Provisions) Bill 2023 ‘includes consequential amendments and transitional arrangements to support the Objective Bill’.
According to the exposure draft Explanatory Memorandum for the Objective Bill, ‘[t]he objective is not intended to change the operation or interpretation of existing superannuation law, prudential standards or governing rules of superannuation entities’. It is also noted that the objective ‘does not impact regulatory supervision activities and while aligned with, it is separate from trustees’ fiduciary duties and is not intended to guide the regulation of trustees’ conduct or change existing trustee obligations’.
The consultation period closes on 29 September 2023.
Click here for details.
Legislation – Four ASIC Instruments registered
On 31 August 2023, the following instruments relating to managed investment schemes and investor directed portfolio services were registered on the Federal Register of Legislation:
- ASIC Corporations (Amendment and Repeal) Instrument 2023/670;
- ASIC Corporations (Investor Directed Portfolio Services Provided Through a Registered Managed Investment Scheme) Instrument 2023/668;
- ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669; and
- ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647.
Subsequently on 7 September 2023, ASIC issued a media release explaining the background to these changes.
Click here, here, here, here, and here for details.
Treasury – Final report in payment times reporting scheme review
On 31 August 2023, Treasury released the final report in relation to the review of the effectiveness and operation of the payment times reporting scheme in the Payment Times Reporting Act 2020 (Final Report). The commencement of the review was announced on 6 December 2022 and a consultation paper in connection with the review was released earlier this year (see our Super Alerts from 9 December 2022 and 10 February 2023).
The Final Report makes 14 recommendations and outlines the overall finding that the payment times reporting scheme has merit, ‘[h]owever, certain requirements in the [Payment Times Reporting Act 2020] impose unnecessary regulatory burdens on reporting entities, compromise the effectiveness of the [Payment Times Reporting] Regulator, and limit the accuracy and accessibility of the data’.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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