Issue 813, 13 July 2021
In this issue:
- 2021-22 Budget measure: relief for foreign financial services providers
- Financial services regulation: review of the legislative framework
- Design and Distribution Obligations (DDO): ASFA resources webpage
- Royal Commission implementation: insurance in super exempt from ‘deferred sales model’
- Insurance in Superannuation Voluntary Code of Practice
2021-22 Budget measure: relief for foreign financial services providers
Treasury has released a consultation paper outlining options to restore regulatory relief for Foreign Financial Service Providers (FFSPs) and create a fast-track licensing process for those that wish to establish more permanent operations in Australia. The measure was announced by the Government in May as part of the 2021-22 Budget (see ASFA Action issue 803).
The consultation paper notes that FFSPs provide Australian investors with access to global investment opportunities and overseas markets, and also attract investment and liquidity into Australia. These services are important for many Australian industries – such as superannuation – to support diversified investment portfolios. Australian businesses also benefit from having greater access to overseas funding markets which provide growth opportunities. These measures are intended to reduce duplicate regulation and barriers for FFSPs entering the Australian market.
Treasury is seeking stakeholder feedback on options that aim to:
- provide Australian licensing relief to FFSPs that are already similarly licensed and regulated in other jurisdictions that want to enter the Australian market
- provide Australian licensing relief to FFSPs not based in Australia that provide financial services to their Australian clients
- fast-track the licensing process for FFSPs that will require a licence to operate in Australia.
If you have any feedback that you would like ASFA to consider in relation to the consultation paper, please forward it to Maggie Kaczmarska by close of business Friday 23 July.
Financial services regulation: review of the legislative framework
As reported in ASFA Action issues 790 and 775, the Australian Law Reform Commission (ALRC) is conducting a multi-year review of the legislative framework for corporations and financial services regulation. The terms of reference for the review set out three sub-topics:
- the use of definitions
- regulatory design and hierarchy of laws
- the framing or structuring of Chapter 7 of the Corporations Act 2001
The ALRC recently published a summary of initial stakeholder views on major themes relating to simplification of the legislative framework for corporations and financial services.
The ALRC has also prepared a paper: ‘Rulebooks’ and the legislative hierarchy. This outlines its preliminary views regarding one potential option for reform, relating to the use of definitions and the legislative hierarchy. This work has been undertaken as part of the ALRC’s preparation for its first interim report, which is due by 30 November.
The ALRC has asked ASFA to bring this paper to our members’ attention in order to garner feedback. If you have any feedback you would like to provide in relation to the paper or any of the matters raised in the ALRC review, please forward it to Fiona Galbraith by close of business Friday 13 August or alternatively contact the ALRC directly at financial.services@alrc.gov.au before the end of August.
Design and Distribution Obligations (DDO): ASFA resources webpage
ASFA now has a dedicated DDO resources webpage on the ASFA website to assist members in complying with their DDO responsibilities.
The DDO resources webpage provides ASFA members with access to:
- ASFA / Deloitte Target Market Determination (TMD) Template – accumulation product (as reported in ASFA Action issue 809)
Please contact Maggie Kaczmarska if you have any questions in relation to these resources.
Royal Commission implementation: insurance in super exempt from ‘deferred sales model’
The Government has confirmed that insurance provided within superannuation will be exempt from the new ‘deferred sales model’ for add-on insurance.
The deferred sales model was introduced via the Financial Sector Reform (Hayne Royal Commission Response) Act 2020, which implemented part of the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (see ASFA Action issue 788). The Act provided for regulations to exempt a class of add-on insurance products where it would not be appropriate that they be captured by the deferred sales model. The Act also strengthened regulation over hawking of financial products.
The Government has now confirmed the classes of insurance products that will be exempt from the deferred sales model. The list of exempt classes includes “insurance sold within superannuation (including group life insurance)”.
The Government has also announced some exemptions from the anti-hawking regime. These are limited to basic banking products and will not impact superannuation.
The Government has indicated that it “remains focused on completing implementation of the remaining recommendations of the Hayne Royal Commission”.
Insurance in Superannuation Voluntary Code of Practice
On 30 June, the Code Owners – ASFA, AIST and FSC – announced that they had jointly agreed to replace the Insurance in Superannuation Voluntary Code of Practice (Code) with more detailed guidance that will assist consumers in the areas of claims handling and vulnerable consumers. This decision was taken in light of increasing legislative encroachment and after consultation with members.
The new guidance, which was jointly developed by ASFA, AIST and FSC, goes beyond the statutory framework to assist funds to continue to improve member outcomes for these important cohorts of consumers.
The claims handling guidance note can be found here and the vulnerable member guidance note here.
If you have any questions about the guidance please contact Senior Policy Adviser, Byron Addison.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
