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Issue 868, 13 September 2022 
In this issue: 

 

Launch of new product ASFA Regulatory Watchlist 

The ASFA Policy Team is excited to launch our new Regulatory Watchlist, a comprehensive tool designed to help ASFA members track the progress of regulatory developments impacting superannuation, including consultations, inquiries and reviews and measures before Parliament.  

The Watchlist will also highlight where ASFA has lodged a submission or a working group or similar forum of ASFA members has been convened to address a particular measure.  

The Watchlist will help streamline processes for product, legal, compliance, policy and regulatory affairs practitioners within super funds and their associated service providers. 

It will be published in the ASFA Toolbox section of our website (member login required) and updated regularly to provide timely, valuable, ongoing support to you and your teams. 

If you have any queries about the Watchlist, please contact Julia Stannard. 

 

Annual members’ meeting notice regulations: disallowance motion 

As reported in ASFA Action issue 867, the Government registered the Superannuation Industry (Supervision) Amendment (Annual Members’ Meetings Notices) Regulations 2022 (AMM Notice Regulations) on 2 September. These amend the disclosure requirements for registrable superannuation entities annual members’ meeting (AMM) notices. 

On 6 September, the independent Senator David Pocock lodged a notice that he intends, on 15 September, to move that the AMM Notice Regulations be disallowed. (Note that this timing has now been impacted by the suspension of Parliament due to the Queen’s death.) If the AMM Notice Regulations are disallowed, they will cease to have any effect and the requirements for AMM notices will revert to those set out in the Superannuation Industry (Supervision) Regulations 1993 prior to the registration of the AMM Notice Regulations. 

 

Review of Your Future, Your Super measures: consultation 

In July, the Government indicated it had directed Treasury to review the operation of the Your Future, Your Super (YFYS) laws after the second round of MySuper performance tests have taken place (see ASFA Action issue 859).  

Treasury has now released a consultation paper as part of its Review, seeking feedback on matters including:  

Performance test: 

YourSuper comparison tool: 

Stapling: 

Best financial interests duty (BFID): 

Treasury has indicated that it will hold stakeholder meetings to seek feedback on the paper and will also convene a technical working group as a consultation forum to constructively work through key issues and consider potential solutions in relation to the performance test.

If you have any feedback you would like ASFA to consider in relation to the consultation paper, please forward it to Fiona Galbraith by close of business Friday 30 September 2022. 

 

Financial contingency and resolution planning: consultation 

APRA is consulting on proposed guidance to support two new cross-industry prudential standards on financial contingency and resolution planning. 

APRA consulted on proposed prudential standards CPS 190 Financial Contingency Planning and CPS 900 Resolution Planning between December 2021 and April 2022 (see ASFA Action issue 836). CPS 190 will ensure all APRA-regulated entities have plans for responding to severe financial stress, while CPS 900 will require large or complex entities to take pre-emptive actions, where appropriate, so that, in the event of their failure, APRA can resolve them with limited adverse impacts on the community and the financial system. 

APRA proposes that CPS 900 would apply from 1 January 2024, while CPS 190 would come into force from 1 January 2024 for banks and insurers and from 1 January 2025 for superannuation trustees. A final version of prudential standard CPS 190 is expected later this year, while the final CPS 900 will be released in the first half of 2023. 

APRA is now seeking feedback on draft prudential practice guides CPG 190 and CPG 900. These set out principles and examples of better practice to help entities meet their requirements under the new standards. APRA expects to finalise the guidance in the first half of next year. 

As part of the consultation, APRA has mapped requirements in the proposed prudential standards to relevant guidance in the draft CPG 190 and CPG 900, to help industry understand the proposed reforms in totality. APRA is interested in feedback on whether this integrated approach is helpful for engaging on the proposed reforms. 

If you have any feedback you would like ASFA to consider in relation to the draft prudential guidance, please forward it to Fiona Galbraith by close of business Friday 4 November 2022.  

 

Modernising the prudential architecture: consultation 

APRA has released an information paper outlining its approach to modernising the prudential architecture – a strategic initiative to make the design of the regulatory framework clearer, simpler and more adaptable. 

The project will involve modernising the architecture of prudential standards and guidance for banks, insurers and superannuation funds, to ensure the framework continues to underpin financial safety and stability in a rapidly changing economic and technological environment.

APRA will achieve this through initiatives focused on:  

Several modernisation initiatives are already underway, including APRA’s first prudential standard to strengthen operational resilience (which will replace five current standards). Next steps involve APRA engaging with “regulated entities and other key stakeholders to understand any pain points with the current framework and assess the appetite for change”.  

To support this, APRA is seeking any initial feedback on the challenges and opportunities outlined in its information paper. If you have any feedback you would like ASFA to consider in relation to the information paper, please forward it to Ross Clare by close of business Friday 28 October. APRA will also shortly begin industry engagement on key initiatives in the program through workshops and surveys.  

 

Compensation Scheme of Last Resort: Bills introduced & consultation on regulations 

The Government has introduced into Parliament a package of Bills to implement a financial services Compensation Scheme of Last Resort (CSLR), after Bills introduced by the previous Government lapsed when Parliament was dissolved ahead of the election. 

The package of Bills comprises the Financial Sector Reform Bill 2022, the Financial Services Compensation Scheme of Last Resort Levy Bill 2022 and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2022. Together, these establish the CSLR and the levy framework to fund it. 

The CSLR will facilitate the payment of compensation of up to $150,000 to eligible consumers who have a determination from the Australian Financial Complaints Authority (AFCA) relating to personal financial advice, credit intermediation, securities dealing and credit provision which remains unpaid. 

The Bills are substantially similar to the lapsed Bills. Importantly, superannuation is not included as a service within the scope of the CSLR and would not ordinarily be subject to the annual levy to fund the scheme. However, as with the previous Bills, the levy framework includes the scope for amounts to be levied against sub-sectors that were not liable for the annual levy, in circumstances where there is a funding shortfall. 

The Government will contribute towards the costs of the scheme in its first year of operation, which is proposed to commence from 1 July 2023. The scheme will be fully industry funded through a levy on relevant financial service and credit licensees in the subsequent years of the scheme’s operation. 

Implementation of the CSLR was a recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (see ASFA Action issue 831 for background on the earlier, lapsed Bills for the CSLR.) 

Treasury is also consulting on draft regulations to support the operation of the CSLR. These specify matters relating to the CSLR operator’s reporting requirements and identify persons upon whom a levy will be imposed. If you have any feedback you would like ASFA to consider in relation to the draft regulations, please forward it to Julia Stannard by close of business Friday 30 September. 

 

YFYS performance test – faith-based exemption: Bill introduced 

The Government has introduced into Parliament a Bill modifying the Your Future, Your Super (YFYS) performance test for faith-based superannuation products. 

The Treasury Laws Amendment (2022 Measures No 3) Bill 2022 amends the Superannuation Industry (Supervision) Act 1993 to provide for a supplementary annual performance test for faith-based products. APRA may determine that a product is a faith-based product if a trustee for the product provides APRA with a valid application. Faith-based products pass the annual performance test if they pass the original or the supplementary performance test. 

The amendments were released for consultation in July – see ASFA Action issue 861. 

Treasury is also consulting on draft regulations supporting the amendments. These: 

If you have any feedback you would like ASFA to consider in relation to the draft regulations, please forward it to Fiona Galbraith by close of business Friday 30 September.  

 

Financial Accountability Regime: Bills introduced & consultation on rules 

The Government has introduced into Parliament two Bills to implement the Financial Accountability Regime (FAR), after Bills introduced by the previous Government lapsed when Parliament was dissolved ahead of the election. 

Together, the Financial Accountability Regime Bill 2022 (FAR Bill) and the Financial Sector Reform Bill 2022 introduce a new accountability regime for the banking, insurance and superannuation industries. The Financial Sector Reform Bill 2022 makes consequential amendments to relevant Acts to support the FAR. 

The FAR imposes four core sets of obligations: 

The Bills are substantially similar to the lapsed Bills. 

The FAR will apply to the superannuation and insurance industries 18 months after the commencement of the FAR Bill. 

Implementation of the FAR was a recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (see ASFA Action issue 831 for background on the earlier, lapsed Bills for the FAR.) 

Treasury is also consulting on draft rules to support the operation of the FAR. These prescribe: 

If you have any feedback you would like ASFA to consider in relation to the draft regulations, please forward it to Maggie Kaczmarska by close of business Friday 30 September.  

 

WA de facto superannuation splitting: Royal Assent 

As reported in ASFA Action issue 865, the Western Australian (WA) Parliament recently passed a Bill that is relevant to efforts to allow separating WA de facto couples to access the family law superannuation splitting regime. 

The Family Court Amendment Act 2022 (WA) has now received Royal Assent but the amendments relevant to superannuation splitting have not yet been proclaimed to commence. 

As noted in ASFA Action 865, proclamation of these amendments will be aligned with the proclamation of related amendments in the Commonwealth Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020 and the commencement of the Commonwealth Superannuation Legislation Amendment (Western Australia De Facto Superannuation Splitting) Regulations 2021. 

 

Parliament sitting schedule amended 

With the death of the Queen, the Prime Minister suspended Parliament for at least a fortnight, and as a result the sitting days previously scheduled for this week (Monday 12 – Thursday 15 September) are not proceeding. 

The Government has announced that Parliament will instead sit on Friday 23 September for condolence motions and then reconvene as normal on Monday 26 – Wednesday 28 September. 

 

 

ASFA REGULATORY WATCHLIST

ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations

and other regulatory announcements relevant to superannuation.

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