Issue 757, 1 June 2020
In this issue:
- COVID-19 Coronavirus: early release of super – APRA data
- COVID-19 Coronavirus: transitional arrangements for RG 97 fee and cost disclosure
- COVID-19 Coronavirus: deferral of design and distribution obligations
- COVID-19 Coronavirus: super early access scam
- April 2019 Budget changes to contribution rules: regulations made
- AML/CTF identity verification and family and domestic violence
- Family law superannuation interest rate determination
- Fintech regulatory sandbox: regulations made
- APRA Insight: mythbusting fund mergers
COVID-19 Coronavirus: early release of super – APRA data
APRA has today made its fifth weekly publication of industry-level data from its early release initiative (ERI) data collection.
The data shows that, as at 24 May:
- Payments totalling $12.2 billion have been made since the inception of the early release scheme, at an average of $7,476 per payment
- 1.78 million applications have been received and 1.63 million applications have been paid
- Funds have taken an average of 3.3 business days to pay an application and 94 per cent of applications have been paid within five business days.
APRA has also published the fourth tranche of fund-level statistics from its ERI data collection, revealing the number and value of the payments processed by each fund, as well as the time taken to make payments.
COVID-19 Coronavirus: transitional arrangements for RG 97 fee and cost disclosure
ASIC has published a new frequently asked question (FAQ) confirming that it will be amending the transitional arrangements for the fee and disclosure cost rules in Regulatory Guide RG 97, as set out in ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.
New FAQ 2E, published on 26 May, states as follows:
2E. Will ASIC be amending the transitional arrangements in RG 97 instrument ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070?
Yes.
ASIC will be amending the transitional arrangements for Product Disclosure Statements (PDSs) shortly to allow entities to come into the new disclosure regime from 30 September 2020 and require any PDS given on or after 30 September 2022 to comply with the new disclosure regime. There will be no change to the periodic statement transition arrangements. ASIC will issue a media release and update the RG 97 webpage when the amendment is made.
See also: details of changes to ASIC regulatory work and priorities in light of COVID-19 (row 9).
ASIC had previously flagged that it was considering amending the RG 97 transitional arrangements – see ASFA Action issue 749.
COVID-19 Coronavirus: deferral of design and distribution obligations
In ASFA Action issue 754, we reported ASIC’s intention to defer the commencement date of the design and distribution obligations (DDO) regime for six months, to allow industry participants to focus on immediate priorities and the needs of their customers during the COVID-19 pandemic.
ASIC has now registered the ASIC Corporations (Deferral of Design and Distribution Obligations) Instrument 2020/486 to give effect to this deferral. As a result of the Instrument, industry participants will now only be required to comply with the DDO regime from 5 October 2021. See ASFA Action issues 731, 704 and 686 for background in relation to the DDO regime.
COVID-19 Coronavirus: super early access scams
The Australian Competition and Consumer Commission (ACCC) has published some information on its Scamwatch website about superannuation early access scams seeking to capitalise on the Coronavirus early release initiative.
The website provides an example of a superannuation scam and some tips for consumers to protect themselves against these types of scams, as well as a factsheet.
April 2019 Budget changes to contribution rules: regulations made
The Government has made regulations amending the rules governing when superannuation funds can accept contribution for older individuals, with effect from the 2020-21 financial year.
In its April 2019 Budget, the Government announced a package of measures to make superannuation more flexible for older Australians. One aspect of this involved amending the Income Tax Assessment Act 1997 to allow people under age 67 to make up to three years of non-concessional contributions under ‘bring-forward’ arrangements, with effect from 1 July 2020. Currently, the bring-forward arrangements only apply to individuals under age 65. Amendments to give effect to this measure were introduced into Parliament earlier in May, in the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 (see ASFA Action issue 755).
The remaining aspects of the Government’s Budget announcements involve amending the Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Account Regulations 1997, to increase the:
- age at which the work test starts to apply for voluntary concessional and non-concessional contributions from age 65 to age 67
- cut-off age at which individuals can receive voluntary superannuation contributions from their spouse, from age 70 to age 75.
The Government has now registered the Superannuation Legislation Amendment (2020 Measures No. 1) Regulations 2020 to give effect to these amendments for the 2020-21 and later financial years.
The Regulations are identical to a version released for consultation in March (see ASFA Action issue 740).
AML/CTF identity verification and family and domestic violence
AUSTRAC has registered an amendment to the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (AML/CTF Rules) to provide clarity around how reporting entities can complete identity verification processes where a customer is experiencing family and domestic violence (FDV).
Part 4.15 of the AML/CTF Rules sets out existing processes for reporting entities to follow in limited and exceptional circumstances where a customer is unable to provide satisfactory evidence of their identity. AUSTRAC recently amended Part 4.15 to outline alternative identity proofing processes where the ability to use standard processes is impacted due to the COVID-19 pandemic (see ASFA Action issue 754).
AUSTRAC has now registered the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2020 (No. 3), which makes a further amendment to Part 4.15 to make it clear that a reporting entity can use the alternative processes described in Part 4.15 when their customer is experiencing or has experienced FDV. This recognises that:
- perpetrators of FDV may exert control by withholding the identification documents (ID) of those they abuse
- an abused person may flee their relationship without their ID and then may not have a permanent address, or may have a new address that differs from that shown on their ID.
Family law superannuation interest rate determination
The Australian Government Actuary has made the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2020. The Determination sets the interest rate for adjusting the superannuation entitlements of separated and divorced spouses under splitting orders and agreements made under the Family Law Act 1975.
The Determination sets the interest rate for the adjustment period that comprises the financial year beginning on 1 July 2020 at 5.7 per cent. The Determination also provides the method by which the interest rate is calculated for an adjustment period that includes a period within that financial year.
Fintech regulatory sandbox: regulations made
The Government has made regulations approving conditional exemptions from the Australian financial services licence (AFSL) regime to make it easier for fintech businesses to trial new products, under the ‘enhanced regulatory sandbox’.
According to the Government, the enhanced sandbox will boost Australia’s fintech ecosystem, reducing barriers to entry and promoting competition. Australian consumers will benefit from greater choice in financial services, with technology-driven offerings that are convenient, tailored and cost effective.
The sandbox is intended to create a safe environment for fintech firms to test the viability of new products and services without the requirement to first hold an AFSL, enabling fintech and other firms to bring innovative services and products to market faster and at lower cost, while still providing for important consumer outcomes such as dispute resolution and consumer compensation arrangements.
The Corporations (FinTech Sandbox Australian Financial Services Licence Exemption) Regulations 2020 allows for testing of financial services relating to certain financial products – including superannuation products.
An exemption period under the sandbox will last for no more than 24 months for each financial service provided in relation to each type of financial product being tested. In order to rely on the exemption, a number of ongoing conditions and requirements must be satisfied.
The Regulations will commence on 1 September and were previously the subject of consultation in late 2017 (see ASFA Action issue 649).
APRA Insight: mythbusting fund mergers
APRA has released its latest Insight publication, containing a feature article on the ‘myths and misconceptions’ about superannuation fund mergers. The article addresses topics including:
- satisfying the ‘equivalent rights’ test
- weighing up the costs and benefits of a merger
- selection of a merger partner.
The article notes that:
“APRA takes a facilitative approach to mergers and urges trustees to approach APRA early to discuss their merger plans – to work together to address any perceived barriers. Given the diversity of fund structures and product offerings across the APRA regulated population of funds, APRA’s view is that there is a merger partner for all funds – it’s just a matter of finding the right one.”
The APRA Insight also includes articles on APRA’s preparation and response to the COVID-19 pandemic and APRA’s recent organisational restructure.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
