Issue 754, 11 May 2020
In this issue:
- COVID-19 Coronavirus: early release of super – fraudulent claims, ATO update, APRA data
- COVID-19 Coronavirus: deferral of Royal Commission measures
- COVID-19 Coronavirus: deferral of design and distribution obligations
- COVID-19 Coronavirus: AML/CTF customer identification rules
- COVID-19 Coronavirus: validity of electronic signatures and meetings
- COVID-19 Coronavirus: expedition of work to strengthen workplace health and safety
- Advice in super – EOI for a Working Group
- Parliament to consider super bills this week
COVID-19 Coronavirus: early release of super – fraudulent claims, ATO update, APRA data
On 7 May, a Parliamentary committee established to inquire into the Government’s response to the COVID-19 pandemic heard evidence regarding the detection of some fraudulent claims having been made under the Coronavirus early release of super initiative.
The ATO has released a statement indicating that its systems “were not hacked”, however a “small number of people appear to have had personal details unlawfully used in a bid to defraud the program”. The ATO notes that the matter is currently under investigation by the AFP and for operational reasons it will not comment further at this stage. While the ATO confirmed that its “online systems have not been compromised”, it paused production and delivery of electronic files in order to review its systems and processes.
The ATO subsequently issued CRT Alert 026/2020 advising that funds would continue to receive daily electronic files, but these would be one day later than previously. In addition, the ATO will be generating and sending a second ‘additional information file’ when required. This second file will contain determinations where the ATO recommends that funds further strengthen verification processes with the member over and above existing verification processes that apply to all determinations.
Last week APRA published its first industry-level data relating to benefits paid under the Coronavirus early release initiative (see ASFA Action issue 753). Today, APRA has today made its second weekly publication of industry-level data from its early release initiative (ERI) data collection, showing that trustees are processing 96 per cent of payments within five business days.
The new data indicates that, as at 3 May, funds had issued early release payments to 830,000 members totalling $6.3 billion. The average payment was $7,629 and the average payment processing time was 3.1 days after receiving the application from the ATO.
In addition to industry-level data, APRA has published the first 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. This data shows that of the 142 funds to make payments, 117 (82 per cent) have made more than 90 per cent of payments within the five business days guideline indicated by APRA. With very few exceptions, all payments have been made within 10 business days of receipt of applications from the ATO.
APRA Deputy Chair Helen Rowell said:
“This is a new scheme, and some funds have received tens of thousands of applications, so an average payment time so far of 3.1 days following receipt of applications from the ATO is a positive story.
We recognise, however, that it may be both necessary and appropriate for trustees to take longer in some cases. This is no doubt frustrating to those awaiting payments, but the recent attempted fraud being investigated by the Australian Federal Police emphasises that care is needed to ensure payments go to the right people”.
APRA has highlighted a number of reasons why payments may take longer than five business days, in addition to concerns about possible fraud. These include:
- incomplete information provided by the ATO
- application errors by members that require clarification
- verification of mismatches between member information provided by the ATO and that held by the fund
- defined benefits members whose applications require additional processing.
APRA has developed an infographic to help increase public awareness of the timeframes associated with the early release scheme.
The ATO has also continued to update its questions and answers in relation to the early release initiative, most recently through the release of CRT 024/2020.
COVID-19 Coronavirus: deferral of Royal Commission measures
The Government has announced a six-month deferral to the implementation of commitments associated with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry as a result of the significant impacts of the COVID-19 pandemic.
Under the updated timetable, those measures that the Government had indicated would be introduced into the Parliament by 30 June 2020 will now be introduced by December 2020. Similarly, those measures originally scheduled for introduction by December 2020 will now be introduced by 30 June 2021. (See ASFA Action issue 718 in relation to the Government’s Royal Commission implementation roadmap.)
The Government will also extend by six months the commencement dates contained in Royal Commission related exposure draft legislation issued prior to the pandemic (see ASFA Action issue 735).
The Government has indicated that the deferral “balances the need to implement the recommendations of the Royal Commission with the need to ensure our financial institutions are in a position to devote their resources to responding to the significant challenges posed by the coronavirus”.
COVID-19 Coronavirus: deferral of design and distribution obligations
As reported in ASFA Action issue 742, ASIC recently announced a deferral of many of its regulatory initiatives due to the COVID-19 pandemic, and has periodically issued updates and frequently asked questions in relation to specific measures (see ASFA Action issues 750, 749, 746). ASIC has now announced that it will defer the commencement date of the design and distribution obligations (DDO) for six months, until 5 October 2021.
ASIC has indicated the deferral is to allow industry participants to focus on immediate priorities and the needs of their customers at this difficult time. In making this decision, ASIC has also had “regard to the important protections for consumers that these requirements introduce. We expect entities will continue preparing for commencement on the extended timeline”.
ASIC recently consulted on a draft of guidance for the DDO regime (see ASFA Action issues 732, 731, 704 and 686 for background).
COVID-19 Coronavirus: AML/CTF customer identification rules
AUSTRAC has registered a rule under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) to provide greater legal certainty for reporting entities around alternative identity proofing processes during the COVID-19 pandemic. This follows a recent rule change and guidance specifically in relation to satisfying customer identification obligations in relation to the Coronavirus early release initiative (see ASFA Action issues 750 and 751).
Under new rules inserted by the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2020 (No. 2):
- a reporting entity will be permitted to rely, in accordance with its risk-based systems and controls, on alternative identity proofing processes to establish the identity of their customer in circumstances where that customer possesses, but cannot produce or provide, relevant identity documents “because of COVID-19 Pandemic measures”. These alternative identity proofing measures could include acceptance of multiple types of secondary identification documentation, or self-attestation from a customer that information provided in relation to their identity is true and correct
- where a reporting entity is required to verify information based on an original document or a certified copy or extract but cannot do so because of “COVID-19 Pandemic measures”, it will be permitted to rely, in accordance with its risk-based systems and controls, on copies of documents (such as scanned versions or photographs).
“COVID-19 Pandemic measures” is defined to mean any measures implemented or recommended by an Australian government body, reasonable measures adopted by a reporting entity, or reasonable measures adopted by a person, to prevent the spread of COVID-19.
COVID-19 Coronavirus: validity of electronic signatures and meetings
The Government has registered a legislative instrument providing certainty to companies and boards about how they can meet certain obligations under the Corporations Act 2001 during the next six months.
The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020:
- ensures that companies and other entities that are required to or wish to hold a meeting, such as an Annual General Meeting (AGM), may do so using technology rather than face-to-face meetings
- enables a quorum, votes, notices and the asking of questions at the meeting to be facilitated electronically, and allows for information required for the meeting to be circulated and accessed electronically
- gives certainty that when company officers sign a document electronically, the document has been validly executed.
The amendments are not specific to superannuation but will be relevant to the way in which superannuation trustee companies manage their general obligations under the Corporations Act.
The amendments apply from 6 May and will cease to have effect in six months.
COVID-19 Coronavirus: expedition of work to strengthen workplace health and safety
Treasury has advised that the Prime Minister is encouraging workplaces to expedite work to strengthen workplace health and safety so COVID-19 restrictions can be relaxed.
The Safe Work Australia website provides updated information on COVID-19 for workplaces, including the National COVID-19 Safe Workplace Principles that the National Cabinet agreed to on 24 April 2020.
Treasury is seeking information about how ASFA members are intending to operate safely in a COVID-19 environment, including compliance strategies for staff and customers.
Please contact Maggie Kaczmarska if you have any information about how your workplace is intending to operate safely in a COVID-19 safe environment by close of business Wednesday 20 May.
Advice in super – EOI for a Working Group
In the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission), recommendations 3.2 and 3.3 considered advice in super (see ASFA Action issues 735 and 697).
ASFA is canvassing member interest in ASFA facilitating a working group to consider advice in super challenges and/or concerns, with a view of considering how advice in super could be improved.
If you would be interested in joining an Advice in Super Working Group, please contact Maggie Kaczmarska by close of business Wednesday 20 May.
Parliament to consider super bills this week
As reported in ASFA Action issue 751, Parliament will sit on Tuesday–Thursday this week, 12-14 May.
The Government has released draft legislation programs for the Senate and the House of Representatives, indicating that the following bills of relevance to superannuation may be considered this week:
- the Treasury Laws Amendment (2020 Measures No.1) Bill 2020, which contains amendments to make permanent the current tax relief for merging superannuation funds, that is due to expire on 1 July 2020
- the Treasury Laws Amendment (2019 Measures No.3) Bill 2019, which contains amendments to several aspects of the superannuation and related tax legislation, including in relation to:
- protecting your superannuation, unclaimed superannuation and lost members
- superannuation pensions and rollover of death benefits
- employer reporting of salary sacrificed contributions
- downsizer contributions
- the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Bill 2019, which allows separating de facto couples in Western Australia to access the Commonwealth family law superannuation splitting regime.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
