Welcome to the latest issue of the KHQ Super Alert. This week, the ATO released updated guidance on its SFT protocol, while ASIC announced its first civil penalty proceeding in relation to the design and distribution obligation regime and released a report on internal complaint resolution by superannuation fund trustees.
ASIC – directs superannuation trustees to improve their internal dispute resolution systems
On 9 December 2022, ASIC issued a media release, putting superannuation trustees on notice to improve their internal dispute resolution and complaints handling systems. The media release was accompanied by Report 751 Disputes and deficiencies: A review of complaints handling by superannuation trustees which ‘outlines ASIC’s findings on compliance by a selection of trustees with the obligations in Regulatory Guide 271 Internal dispute resolution’.
Five key concerns included:
- a number of trustees (out of 35 reviewed) ‘did not respond to a significant portion of complaints in’ the maximum timeframe;
- ‘[m]ost trustees failed to ensure all complainants were kept informed when their response to the complaints exceeded the maximum timeframes’;
- ‘mandatory content related to a consumer’s right to take their complaint to AFCA’ was omitted from many written responses;
- there were gaps in how trustees used intelligence from complaints to identify or manage systemic issues; and
- ‘[t]rustees’ internal reporting often lacked sufficient detail to identify, much less remedy, deficiencies in complaint handling’.
ASIC Commissioner Danielle Press said ‘[h]aving robust-end-to-end dispute resolution arrangements, designed with members’ interests in mind, is not a nice to have, it’s a ‘must have’ …. Trustees must prioritise investing in internal dispute resolution systems to meet their legal obligations’.
Click here for details.
Assistant Treasurer – Government’s ‘Superannuation Agenda’
On 8 December 2022, Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, released his address on the ‘Government’s superannuation agenda’ and emphasising the importance of ‘settling the objective’ of superannuation.
The address discusses the ‘strength of superannuation [resting] on 3 core tenets’: ‘a political consensus, strong performance [and] member satisfaction’, with member experience being the ‘missing piece in the reform project’. The address indicates that the ‘Government and regulators will take steps to lift’ customer experience, before briefly touching on ‘diversity and competition’ and innovation in superannuation, especially for retirement income products.
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ATO – updated SFT protocol released
On 7 December 2022, and after consultation with industry, the ATO released an update of its Successor Fund Transfer (SFT) protocol. The updates ‘provide further guidance to reduce impacts to members and the super operating system during and after an SFT’.
‘Key changes include:
- inclusion of Intra-Fund Transfers (IFT) guidance
- a new section on limited-service period (previously known as black-out periods)
- detailed guidance on actioning release authorities
- tips and useful links for Digital Identity Management and Access Manager, and
- detailed guidance on Transfer Balance Account Reports and actioning Commissioner’s commutation authorities.’
Click here for details.
Treasury – announced the review of payment reporting times
On 6 December 2022, an independent review of the Payment Times Reporting Act 2020 was announced and the terms of reference for the review were released. The Act requires reporting entities (which extends to superannuation funds) to ‘submit payment times reports to the Payment Times Reporting Regulator every 6 months’.
The review is to consider (under section 57B of the Act) the:
- ‘[e]fficacy of the Act in meeting its objectives’;
- ‘[i]mpact of related government policies on the payment terms and practices of reporting entities’; and
- ‘[e]ffectiveness of other policy measures to improve payment terms and practices for small businesses’.
The review is to be conducted by the Hon Dr Craig Emerson, will include a public consultation process and a written report is to be provided to the Government by 30 June 2023.
Click here for details.
ASIC – first civil penalty proceedings for alleged breaches of design and distribution obligations
On 6 December 2022, ASIC commenced its first civil penalty proceedings alleging breaches of design and distribution obligations in the Federal Court. ASIC alleges that the required Target Market Determinations (TMDs) did not appropriately limit the distribution audience (being credit card customers). Deputy Chair Sarah Court said ‘The design and distribution obligations embed a consumer-centric approach for the issuers and distributors of financial products. Product providers must monitor and review whether consumers are receiving products consistent with their needs and cannot bring a ‘set-and-forget mindset’ to product governance’.
ASIC has now issued over 20 interim stop orders under the DDO regime and has stated that regulating financial products to ‘deliver better outcomes for consumers’ is a priority for ASIC and they will ‘maximise these increased protections and see the long-term benefits of the DDO regime realised’.
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Federal Register of Legislation – New SPS 310 registered
On 6 December 2022, Superannuation (prudential standard) determination No. 4 of 2022 was registered on the Federal Register of Legislation. This revokes the previous version of APRA Prudential Standard SPS 310 Audit and Related Matters and replaces it with an updated version. As mentioned in our 17 December 2021 Super Alert, APRA underwent consultation for the then-proposed changes to SPS 310. Among other things, updates include: ‘an updated schedule of reporting standards that must be addressed in an RSE auditor’s report’ and removing ‘audit requirements for revoked reporting standards’. The amendments will commence on 30 June 2023.
Click here for details.
ATO – announced the cross-agency process for retirement income stream product providers
On 5 December 2022, the ATO updated its webpage concerning the ‘Cross-agency process for innovative retirement income stream products’ which allows retirement income stream product providers (product providers) to request information and raise topics or issues arising from these products with the various government agencies that regulate these products.
The agencies involved are in the process are the ATO, APRA, ASIC, the Department of Social Services (DSS) and Services Australia. The process is voluntary and can be ‘used by product providers at any time during the development of their innovative retirement income stream product’.
The two key concepts are:
- ‘Concept exploration’ gives providers the opportunity to ‘test the concepts of the proposed product’ and ‘to seek information and guidance on the relevant legislation, and the preliminary view provided in the request’.
- ‘Product review’ allows the provider to ‘present a product at a more mature development stage to seek information and guidance on the relevant legislation and the preliminary view provided in the request’.
‘The type of information and guidance provided by each agency will differ depending on their regulatory responsibilities and powers, and:’
- ‘should not be seen as providing formal endorsement or a recommendation for a given product’; and
- ‘must not be used in any marketing or promotional material…’.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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