ASFA Action Issue 971
In this issue:
- Sustainable finance taxonomy: second consultation
- Financial Accountability Regime: regulator ‘drop-in’ session
- Bills update
- Transfer balance arrangements for capped DB income streams in SFTs: ATO update
- Covid-19 response inquiry report
Sustainable finance taxonomy: second consultation
The Australian Sustainable Finance Institute (ASFI) has launched a second round of public consultation on the development of an Australian sustainable finance taxonomy.
A taxonomy is a classification tool that offers a credible, consistent assessment of whether an economic activity is climate aligned. It is designed to support market transparency, tackle greenwashing and increase investor confidence. Once developed, the Australian Taxonomy will provide a common language to help companies, investors and the wider community confidently assess the credibility of green claims and allocate capital for the climate transition.
Development of the taxonomy is a key priority in the Government’s sustainable finance agenda. The taxonomy’s initial development phase is being led by ASFI in partnership with the Department of Treasury.
In this consultation, ASFI is seeking feedback on:
- the climate change mitigation criteria for all six priority sectors for development (electricity generation and supply; minerals, mining and metals; buildings; manufacturing and industry; transport; agricultural land use)
- a Do No Significant Harm framework
- minimum social safeguards
- ways in which the taxonomy can be used.
ASFI is seeking submissions by Sunday 1 December. It will deliver its initial taxonomy for climate mitigation to Government at the end of 2024.
If you have any feedback you would like ASFA to consider in relation to the consultation package, please forward it to Andrew Craston by close of business Monday 18 November.
ASFI undertook an earlier round of consultation in May-June – see ASFA Action issues 964 and 948 for background.
Financial Accountability Regime: regulator ‘drop-in’ session
Ahead of the commencement of the Financial Accountability Regime (FAR) for the superannuation and insurance industries from 15 March 2025, APRA and ASIC are holding an APRA Connect ‘drop-in’ session covering the process to complete and submit the FAR Entity Profile form.
The session will cover how to assign the ‘FAR Administrator’ and ‘Breach Administrator’ roles in APRA Connect and a walkthrough of the ‘FAR – Entity Profile’ form and submission timeframes, with an opportunity to ask FAR entity profile questions in real time.
The session will be held on Monday 18 November from 2.00 – 3.00pm AEDT. ASFA members interested in attending can register directly via this link.
ASIC and APRA have also asked ASFA to draw to members’ attention ‘how to’ videos on the APRA website for submitting an entity profile and registering an accountable person.
Bills update
Anti-Slavery Commissioner
The Modern Slavery Amendment (Australian Anti-Slavery Commissioner) Act 2024 received Royal Assent on 11 June. As reported in ASFA Action issue 925, this establishes the core functions of the Anti-Slavery Commissioner, following a recent review of the Modern Slavery Act 2018. That Act requires large businesses and other entities operating in Australia – including many superannuation funds – to report annually on how they are addressing modern slavery risks in their domestic and global operations and supply chains.
The commencement date for the Modern Slavery Amendment (Australian Anti-Slavery Commissioner) Act 2024 was set to be fixed by proclamation. On 1 November, the commencement date was proclaimed to be 7 November.
Advice – private member’s Bill
Bert Van Manen MP (Liberal National Party of Queensland) has introduced into the House of Representatives a private member’s Bill proposing advice-related reforms.
The Corporations Amendment (Streamlining Advice Process) Bill 2024 aims to streamline the engagement process between a financial adviser (providing entity) and their client.
According to the explanatory memorandum, the changes outlined in the Bill are informed by, and build upon, the Quality of Advice Review, specifically ‘Recommendation 9 – Statement of Advice’ and the ‘Good Advice Duty’. This Bill provides for the creation of a clear and concise Letter of Engagement, prior to any financial advice being provided, and for a streamlined Record of Advice to be supplied to the client by a providing entity, replacing the Statement of Advice.
Transfer balance arrangements for capped DB income streams in SFTs: ATO update
As reported in ASFA Action issues 956 and 954, the Government recently registered the Income Tax Assessment Amendment (Superannuation) Regulations 2024. These amended the income tax regulations to ensure that individuals with a capped defined benefit income stream (CSBIS) are not adversely impacted in the event of a Successor Fund Transfer (SFT). The ATO subsequently issued CRT Alert 001/2004 to draw attention to the amendments, which will be applied retrospectively from 1 July 2017. That alert noted that the ATO would be working closely with impacted funds to adjust the transfer balance accounts of recipients of CDBIS who have been adversely affected.
The ATO has now indicated that funds should make contact, through its Super Enquiry Service, if
- the fund has been part of an SFT since 1 July 2017;
- CDBIS members have been negatively impacted; and
- the fund has not already been contacted by the ATO to discuss remediation.
Covid-19 response inquiry report
A report has been tabled from the independent inquiry into Australia’s response to the Covid-19 pandemic, commissioned by the Government last year.
The inquiry considered the early release of superannuation scheme under which eligible individuals could access up to $10,000 from their superannuation in each of the 2019-20 financial year and the period between 1 July and 31 December 2020.
The report notes that the inquiry panel heard a variety of views and conflicting evidence on the early withdrawal of superannuation scheme. On balance, the panel was of the view that “pre-existing hardship provisions would have been sufficient to meet the scheme’s broad objectives and would have minimised the negative impacts on retirement savings into the future.”
The panel noted, as one of the ‘learnings’ for future public health or economic crises:
“Blanket early access to superannuation should not be considered as an appropriate policy measure to support individuals in a large temporary shock such as the pandemic, as the loss of future income to the individual typically outweighs the economic benefit gained during the crisis period. Early access to superannuation should be available for individuals through the established financial hardship processes available at the Australian Taxation Office.”
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
