Issue 804, 12 May 2021
In this issue:
- Miscellaneous amendments to Treasury portfolio laws: consultation
- APRA Super Data Transformation: FAQs
- Royal Commission implementation: Financial Regulator Assessment Authority
- Royal Commission implementation: insurance claims handling
- ASIC: new Chair, Deputy Chair and statement of expectations
This ASFA Action outlines some regulatory developments from the days prior to last night’s Budget. Our special Budget night ASFA Action can be accessed here.
Miscellaneous amendments to Treasury portfolio laws: consultation
Treasury has released a consultation package of draft legislation and regulations proposing miscellaneous amendments to a range of portfolio legislation.
Of particular relevance to superannuation, the package:
- Amends the Income Tax Assessment (1997 Act) Regulations 2021 to ensure that if a fee refund is made under section 99G(6) of the Superannuation Industry (Supervision) Act 1993, and the refund is paid from a general reserve, it is not considered a concessional contribution. Subsection 99G(6) relates to refunds made because the trustee has charged more than the administrative fees permitted on a low balance account as a result of the Protecting Your Super (PYS) reforms. This amendment will apply from the 2021-22 financial year onwards.
- Inserts a provision into the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLM Act) to allow the Commissioner of Taxation to recover amounts overpaid under Part 4B of that Act in certain circumstances. Part 4B sets out a procedure for the Commissioner to transfer various ATO-held superannuation amounts for a person into an active account held by a superannuation provider for the person. It was introduced as part of the PYS reforms, to give the Commissioner greater powers to proactively consolidate ATO-held super into an active account. This amendment will commence the day after the legislation receives Royal Assent.
- Amends the SUMLM Act in relation to New-Zealand (NZ) sourced amounts held by the ATO and the transfer of amounts to NZ KiwiSaver scheme providers, including to:
- ensure New-Zealand (NZ) sourced amounts held under that Act are treated consistently with the ‘trans-Tasman portability’ rules in Part 12A of the Superannuation Industry (Supervision) Regulations 1994
- require the Commissioner to administer any money paid to them under the SUMLM Act in a way that allows any NZ-sourced amount to be identified separately
- ensure ATO-held amounts can be paid to NZ KiwiSaver scheme providers, consistent with forthcoming reforms included in the Treasury Laws Amendment (2020 Measures No. 5) Act 2020 (TLA (2020M No 5) Act 2020) (see ASFA Action issue 783 for background). Those reforms in the TLA (2020M No 5) Act 2020 will commence on 11 December 2021 unless earlier commencement is proclaimed.
These amendments will apply in relation to payments of amounts by the Commissioner from the later of the day after the legislation receives Royal Assent or the commencement of the amendments about KiwiSaver in the TLA (2020M No 5) Act 2020.
If you have any feedback you would like ASFA to take into account in relation to the consultation package, please forward it to Julia Stannard by close of business
Wednesday 19 May.
APRA Super Data Transformation: FAQs
As reported in recent ASFA Actions, APRA recently finalised ten reporting standards under phase 1 of its Superannuation Data Transformation project.
In late April, APRA published a first set of frequently asked questions (FAQs) for registrable superannuation entity (RSE) licensees about these reporting standards and indicated it would release FAQs on a regular schedule in the lead up to the first submission of data under the standards on 30 September.
APRA has now published a second set of FAQs on the phase 1 standards.
Royal Commission implementation: Financial Regulator Assessment Authority
The Government has announced it will, by the middle of this year, introduce legislation to establish the Financial Regulator Assessment Authority (FRAA).
Establishment of the FRAA is part of the Government’s response to recommendation 6.14 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (see ASFA Action issue 697).
The Government has indicated the FRAA will provide an external framework for assessing the effectiveness and capability of both ASIC and APRA. The FRAA will consist of three independent statutory appointees together with the Treasury Secretary. Reviews will be conducted once every two years and as directed by the Treasurer.
In its first year, the FRAA will be tasked with assessing the effectiveness and capability of ASIC so as to assist the incoming chair in ensuring ASIC is operating effectively and consistent with the Government’s Statement of Expectations.
Royal Commission implementation: insurance claims handling
ASIC has released an information sheet Claims Handling and settling: How to comply with your AFS licence obligations (INFO 253), following the passage of the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (see ASFA Action issue 786). The information sheet aligns with amendments made to the Corporations Act 2001 that make claims handling and settling a ‘financial service’.
The information sheet describes the obligations which will apply to superannuation trustees, as a result of the reforms. RSE licensees will need to hold an Australian Financial Services (AFS) licence with an authorisation to provide a ‘superannuation trustee service’ which covers all conduct associated with operating a superannuation fund, including claims handling. The substantive obligations of an AFS licensee with a claims handling authorisation will be relevant to superannuation trustees. For example, the trustee and the insurer will be required to handle claims efficiently, honestly and fairly.
An RSE licensee that held, before 1 January 2021, an AFS licence with an authorisation to deal in a superannuation interest will be deemed to be authorised to provide a superannuation trustee service from 1 January 2021 and will not need to vary its AFS licence.
Specifically, the information sheet explains:
- what is a ‘claims handling and settling service’
- how the AFS licensing regime applies to these services from 1 January 2022
- when an AFS licence or variation for claims handling and settling is needed
- who can handle and settle claims on behalf of an AFS licensee
- what are the obligations of an AFS licensee and how these obligations apply to claims handling and settling
- when and how to apply for an AFS licence or variation, including transitional arrangements, and how ASIC will assess applications.
In April, the Government made regulations that exclude certain people from being ‘claimant intermediaries’ such as financial advisers in certain circumstances (see ASFA Action issue 799 for further information) and the information sheet has been updated to reflect these changes.
If you have any questions about INFO 253, please contact Senior Policy Adviser, Byron Addison.
ASIC: new Chair, Deputy Chair and statement of expectations
The Government has announced the appointment of Joseph Longo as the full time Chairperson and Sarah Court as an additional full time Deputy Chairperson to ASIC, each for a five year period commencing on 1 June 2021. Mr Longo will replace outgoing Chair James Shipton, while Ms Court will fill the role left vacant by former deputy chairperson Daniel Crennan.
The Government has also indicated that following the commencement of the new Chair and Deputy Chair, it will issue ASIC with a new Statement of Expectations. This will make clear that “the Government expects the Commission, as a whole, to operate as a strategic board and that all operational matters are the responsibility of the chair, who is the accountable authority. The statement will also make clear that the Government expects ASIC to support Australia’s economic recovery from the COVID pandemic.”
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
