Issue 684, 10 September 2018
In this issue:
- Royal Commission: insurance hearings
- AFCA complaint resolution process: webcast
- Insurance in superannuation: ASIC review
- Insurance in Superannuation Code of Practice: Key Facts Sheet
- ASIC industry funding model: reporting of business activity metrics
- Transitional superannuation regulations: deferral of sunsetting date
Royal Commission: insurance hearings
The Royal Commission into misconduct in the banking, superannuation and financial services industry has today commenced its sixth round of hearings, in relation to insurance.
The ASFA team is closely monitoring the Commission’s proceedings and will provide a brief summary of the first and last day’s hearings, as well as each day where insurance in superannuation is discussed. Members will be able to access these updates on the ASFA website, via this link.
AFCA complaint resolution process: webcast
The Australian Financial Complaints Authority (AFCA) will shortly hold a webcast on its complaint resolution process.
AFCA has indicated that the webcast will be particularly relevant for those working directly with AFCA regarding internal and external dispute resolution responses to customer complaints.
Attendees will have the opportunity to submit questions both before and during the webcast.
The webcast will be held on Tuesday 25 September, from 2.00 – 3.30pm. If you are interested in attending, please register directly via this link through the AFCA website.
A recording of the webcast will subsequently be made available on the AFCA website www.afca.org.au.
Insurance in superannuation: ASIC review
ASIC has released a report on the provision of insurance cover through superannuation.
Report 591 Insurance in superannuation details ASIC’s findings from its recent review of the insurance arrangements of superannuation trustees. ASIC initially obtained information from 47 trustees regarding their insurance arrangements in the 2015-16 financial year, then performed a more detailed review in relation to 18 of those trustees.
The review focused on:
- insurance claims and complaints handling
- disclosures about insurance (including about cover ceasing)
- insurer rebates paid to trustees
- whether members were defaulted into demographic categories that resulted in higher premiums.
ASIC has highlighted a number of findings of concern. These include:
- poor complaints-handling timeframes and practices, as almost a third of trustees in the review took more than 90 days on average to resolve complaints about insurance in 2017-2018
- some trustees were still automatically defaulting members as ‘smokers’ when transferring them to different sections of the same fund, resulting in higher insurance premiums payable by those members. All trustees have agreed to discontinue this practice.
ASIC Deputy Chair, Peter Kell, said that while some improvements were being introduced by trustees, there was considerable work to do to raise standards in the areas covered by the review. He said that in coming months, ASIC will focus on ensuring fund members do not experience adverse outcomes arising from poor complaints handling or inappropriate defaults. Mr Kell noted that ASIC will be consulting on stronger internal dispute resolution requirements for superannuation after the Australian Financial Complaints Authority commences operations in November. This will require greater transparency about complaints handling performance by superannuation funds.
In addition to the results of the review, Report 591 sets out actions trustees should take to achieve better outcomes for members who acquire life insurance coverage through their superannuation funds.
Insurance in Superannuation Code of Practice: Key Facts Sheet
The Code Owners of the Insurance in Superannuation Code of Practice (the Code), ASFA, AIST and the FSC, have released a Key Facts Sheet and information cover sheet.
The Code requires trustees that adopt the Code to publish on their website a Key Facts Sheet for the automatic insurance cover they offer.
The purpose of the Key Facts Sheet is to provide high-level, fund-specific insurance information in a format that is consistent across the industry, to help consumers better understand their cover and to compare cover across different superannuation funds.
The information cover sheet provides guidance on the use of the Key Facts Sheet and how it can be customised to reflect a trustee’s insurance offering.
If members have any questions about the Key Facts Sheet, they should contact Byron Addison.
ASIC industry funding: reporting of business activity metrics
As reported in ASFA Action issue 681, ASIC will require all its regulated entities to complete a business activity statement by 27 September, under its new industry funding arrangements. ASIC has requested that ASFA remind trustees of this new reporting obligation.
The industry funding arrangements, which commenced on 1 July 2017, require organisations regulated by ASIC to contribute towards the associated regulatory costs incurred in the previous financial year.
To enable ASIC to calculate invoices, organisations must submit or confirm pre-populated business activity metric data on the operation of their business from the previous financial year. This will be done via a new online ASIC Regulatory Portal.
ASIC indicated that a letter has been sent to each regulated entity’s registered office address, containing instructions to complete the process and a unique industry funding security key which is to be used to launch an online form. ASIC has further advised that if an entity did not receive their letter, they should refer to related information on the ASIC website, including the business activity metric checklist.
Transitional superannuation regulations: deferral of sunsetting date
The Government has deferred the sunsetting (expiry) date for certain transitional superannuation regulations for 12 months.
The Superannuation Industry (Supervision) (Transitional Provisions) Regulations 1993 (Transitional Regulations) were due to sunset (expire) on 1 October 2018. These primarily contain transitional provisions related to the introduction of the Superannuation Industry (Supervision) Act 1993 and the Superannuation Industry (Supervision) Regulations 1994.
The Attorney-General has now deferred the sunsetting date for the Transitional Regulations until 1 October 2019, by issuing the Legislation (Deferral of Sunsetting—Superannuation Industry (Supervision) (Transitional Provisions) Regulations) Certificate 2018.
The Certificate states that:
The Treasurer has advised that it is likely that the Government will introduce minor technical amendments to the Superannuation Industry (Supervision) Act 1993 within the next 12 months which will result in the Regulations needing to be repealed and remade. Even if these amendments were to pass before 1 October 2018, there would not be sufficient time for the making of replacement regulations before 1 October 2018.
A deferral of the sunsetting date for the Regulations will avoid the need to remake the Regulations for the period between the sunset date and the date the replacement regulations commence.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
