ASFA Action Issue 967, 8 October 2024
In this issue:
- Revised AFCA Approach to superannuation death benefits: consultation
- Climate-related financial disclosure: Australian sustainability standards
- Advice fee arrangements: ASIC Information Sheets
- Derivative Transaction Rules (Reporting) 2024: ASIC guidance
Revised AFCA Approach to superannuation death benefits: consultation
The Australian Financial Complaints Authority (AFCA) has released for consultation draft revisions to its Approach to superannuation death benefits.
AFCA Approach documents support consumers and financial firms’ understanding of AFCA’s approach to certain issues and how it reaches decisions. The Approach documents provide practical information on how AFCA will assess and determine complaints and enhance AFCA’s transparency, consistency, and efficiency.
According to AFCA, the revisions to the Approach include minor clarifications to its existing guidelines on handling complaints about the distribution of superannuation death benefits, as well as greater detail about:
- how AFCA applies definitions of terms such as ‘dependant’ and ‘spouse’
- the circumstances in which AFCA might consider it appropriate to include adult children and legal personal representatives in distributions
- trusts for minor children
- how AFCA approaches cases where there has been violence or abuse in a relationship, or a claimant has been involved in the death of the fund member.
As part of the consultation, AFCA has provided both a clean and a tracked changes version of the draft revised Approach.
AFCA intends to finalise and publish the revised Approach in December this year.
If you have any feedback you would like ASFA to consider in relation to the revised Approach, please forward it to Julia Stannard by close of business Friday 18 October.
AFCA recently consulted on drafts of two other Approaches to specific types of complaints in its superannuation jurisdiction – see ASFA Action issue 963 for background.
Climate-related financial disclosure: Australian sustainability standards
The Australian Accounting Standards Board (AASB) has finalised two sustainability reporting standards, following the recent passage of legislation prescribing mandatory sustainability reporting for large Australian businesses and financial institutions – including large registrable superannuation entities (RSEs).
As reported in ASFA Action issue 965, the Treasury Laws Amendment (Financial Market Infrastructure & Other Measures) Act 2024 recently received Royal Assent. The Act inserts into the Corporations Act 2001 a framework for mandatory sustainability reporting for certain entities, phased in over three years. While some large entities will be required to prepare sustainability reports for annual reporting periods starting on or after 1 January 2025, RSEs with $5 billion or more assets under management will first be required to prepare sustainability reports for annual reporting periods commencing from 1 July 2026.
Earlier this year, the AASB undertook consultation on two sustainability reporting standards (see ASFA Action issues 958 and 929 for background). With the legislative regime now settled, the AASB has finalised the standards, as follows:
- AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information – this standard is voluntary. An entity electing to voluntarily apply AASB S1 would disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term.
- AASB S2 Climate-related Disclosures – this standard reflects the mandatory disclosure of information, required under the new legislative regime, about climate-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term.
The sustainability reporting information page on the ASIC website should shortly be updated to reflect the finalisation of the reporting standards.
Advice fee arrangements: ASIC Information Sheets
In response to the advice fee consent reforms recently enacted via the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (see ASFA Action issue 955), ASIC has published two Information Sheets as follows:
- Information Sheet 286 FAQs: Ongoing fee arrangements and consents
- Information Sheets 287 FAQs: Non-ongoing fee requests or concerns.
ASIC has also updated the following Information Sheets to cross-reference to INFO 286 and INFO 287:
- Information Sheet 256 FAQs: Ongoing fee arrangements
- Information Sheet 280 FAQs: Non-ongoing fee consents.
The guidance in the Information Sheets is to apply to ongoing fee arrangements, and written requests or consents to deduct fees under non-ongoing fee arrangements:
- entered into or renewed on or after 10 January 2025 (start day)
- for ongoing fee arrangements in force on the start day, from the first anniversary of the arrangement that occurs after the start day, and
- for non-ongoing fee arrangements in force on the start day, after the arrangement is terminated, renewed or varied, or from 12 months after the start day (whichever is earlier):
The Information Sheets continue guidance that is contained in Information Sheet 256 FAQs: Ongoing fee arrangements and Information Sheet 280 FAQs: Non-ongoing fee consents, but include amended and additional guidance in response to the Schedule 1 advice fee consent reforms. The guidance in INFO 256 and INFO 280 will continue to apply to ongoing fee arrangements and written consents to deduct fees or costs under non-ongoing fee arrangements that exist until the above dates.
For further information on these regulatory guidance updates see ASIC’s Delivering Better Financial Outcomes package page.
Derivative Transaction Rules (Reporting) 2024: ASIC guidance
ASIC has published an update to Regulatory Guide RG 251 Derivative transaction reporting to support the ASIC Derivative Transaction Rules (Reporting) 2024 (2024 Rules), which were recently finalised following several rounds of consultation (see ASFA Action issue 962 for background). Both the 2024 Rules and the update to RG 251 commence on 21 October.
The update to RG 251 represents the first of two stages of guidance explaining the derivative transaction reporting regulatory regime and gives targeted guidance to help reporting entities understand how to comply with their reporting obligations under the 2024 Rules.
The 2024 Rules repeal and replace the current ASIC Derivative Transaction Rules (Reporting) 2022 to align with international reporting standards, consolidate transitional provisions and exemptions, and ensure the reporting requirements are fit for purpose – see ASFA Action issue 962 for background.
ASIC has advised that it recognises that the 2024 Rules are a significant overhaul when compared with the prior ASIC reporting rules requirements, including that ISO 20022 is specified as the technical standard for reporting. Since making the 2024 Rules in December 2022 there have been ongoing international developments and dependencies for consideration ahead of settling final outstanding ASIC guidance.
ASIC is aware that other jurisdictions will be going live with revised reporting requirements on or around the same time as Australia.
Given this ASIC has indicated that, for reporting entities that make reasonable efforts to comply with the 2024 Rules, it will take a measured approach to compliance until March 2025. If ASIC identifies deliberate or systemic breaches, or a failure to make all reasonable endeavours to comply, it will take regulatory action.
ASIC has indicated that it is working to finalise and publish its second stage of technical guidance materials.
For further information please see ASIC’s 2024 Rules from 21 October 2024 webpage.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.