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Issue 759, 16 June 2020 
In this issue: 

 

ASIC industry funding: draft Cost Recovery Implementation Statement 

ASIC has published its draft Cost Recovery Implementation Statement (CRIS) 2019-20 for stakeholder feedback. The CRIS details ASIC’s actual regulatory costs for 2018-19 and provides an estimate of costs for 2019-20. The estimated costs are published to give industry an indication of what levy costs to expect. 

The CRIS includes: 

If you have any feedback you would like ASFA to consider including in a response to ASIC, please forward it to Andrew Craston by close of business 10 July. 

Final levies to be paid by entities will be based on actual costs for 2019-20, which will be published in December 2020 and invoiced in January 2021. 

 

 

COVID-19 Coronavirus: early release of super – APRA data 

APRA has made its seventh weekly publication of industry-level data from its early release initiative data collection. 

The data shows that from inception of the early release initiative (20 April) to 7 June: 

APRA has also published the sixth tranche of fund-level statistics from its early release data collection, revealing the number and value of the payments processed by each fund, as well as the time taken to make payments. 

 

 

COVID-19 Coronavirus: APRA COVID-19 Ongoing Data Collection 

On 5 June APRA emailed ASFA regarding proposed new COVID-19 Ongoing Data Collection (ODC), with feedback due 10 June. 

The ODC will comprise two components: 

It is proposed the initial reports would be due: 

APRA has proposed that ongoing reports will be due the second Wednesday following the end of the month/quarter. 

ASFA sent a letter to APRA on 10 June in which we advocated for more time for consultation; a longer period for funds to report, in particular the initial report; and a reduction in the scope of data items, as well as identifying a number of specific issues raised by members. 

 

 

COVID-19 Coronavirus: ASIC updated timings including Royal Commission recommendations and IDR 

On 11 June ASIC published an update on timing of key outputs over the coming months, reflecting changes as announced on 14 April (see also ASFA Action issue 749). This includes the proposed timing of consultation and release of regulatory guidance relating to legislation implementing the recommendations of the Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission). 

ASIC’s revised timetable of ongoing work will continue to be updated and included the following: 

Project  Indicative timing  Activity 
Product intervention power
The product intervention power enables ASIC to intervene in relation to a product (or class of products) when it is satisfied the product or (class of products) has resulted, will result or is likely to result in significant consumer detriment. 
June 2020  Regulatory guidance: ASIC will publish a regulatory guide in June 2020 on how ASIC will use the product intervention power. 
Internal dispute resolution review
ASIC’s review of internal dispute resolution (IDR) standards to align with new statutory requirements for IDR, reflect the standards for effective complaints handling in AS/NZS 10002:2014 and refine its requirements in some key areas based on ASIC’s experience in administering the policy. 
July 2020  Regulatory guidance: ASIC will publish a new regulatory guide, RG 271 Internal dispute resolution, outlining updated IDR standards and requirements. The guide will be published in July 2020 to allow industry to make the necessary changes ahead of commencement on 5 October 2021.
With increased levels of financial hardship and consumer vulnerability as a result of the COVID-19 pandemic, ASIC considers it essential that IDR performance is significantly improved. 
Product design and distribution obligations
The product design and distribution obligations will bring accountability for issuers and distributors to design, market and distribute financial and credit products that meet consumer needs. Issuers and distributors must comply with these obligations from 5 October 2021. 
Q3 2020  Regulatory guidance: ASIC plans to publish regulatory guidance on product design and distribution obligations in Q3 2020, responding to industry requests for guidance to be finalised as soon as possible. 
Internal dispute resolution data collection and reporting  Q3 2020  Consultation: ASIC will commence the second phase of its targeted consultation on IDR data collection and reporting in Q3 2020. This consultation will build on the feedback that industry and consumer stakeholders provided in response to Consultation Paper 311 Internal dispute resolution: Update to RG 165. 
Commencement of changes to fees and costs disclosure requirements for managed funds and superannuation
Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97). 
September 2020  Legislative instrument: ASIC has announced that it will amend the transitional arrangements for Product Disclosure Statements (PDSs) to allow entities to come into the new disclosure regime from 30 September 2020 and require any PDS given on or after 30 September 2022 to comply with the new disclosure regime. There will be no change to the periodic statement transition arrangements. ASIC will issue a media release and update the RG 97 webpage when the amendment is made. 
Insurance in super
ASIC’s review is looking at industry’s progress on improving insurance
outcomes for consumers. 
December 2020  Report: ASIC has continued with this work and anticipate to be in a position to publish a report by December 2020. 
Royal Commission recommendations
3.4 No hawking in superannuation.
4.1 No hawking of insurance.
4.3 Deferred sales model for add-on insurance. 
December 2020*  Consultation: ASIC intends to consult in late 2020 on changes to Regulatory Guide 38. The hawking prohibitions to expand the hawking prohibition to superannuation and insurance products. ASIC also intends to consult on an information sheet about the deferred sales model for add-on insurance. 
Royal Commission recommendations
2.1 Annual renewal and payment.
2.2 Disclosure of lack of independence.
3.2 No deducting of advice fees from MySuper accounts.
3.3 Limitations on deducting advice fees from choice accounts. 
December 2020*  Regulatory guidance and legislative instruments: ASIC will release an update to Regulatory Guide 245 Fee disclosure statements (RG 245) and make the relevant legislative instruments in December 2020, subject to passage of legislation. ASIC consulted on the update to RG 245 and legislative instruments in March 2020. 
Royal Commission recommendations
1.15 Enforceable code provisions. 
Q2 2021**  Regulatory guidance: ASIC intends to consult on a draft update to Regulatory Guide 183 Approval of financial services sector codes of conduct. ASIC also intends to undertake targeted consultation at an earlier stage. 

* This timing is contingent on the Government’s timing of introduction of the Bill into Parliament.
** This timeframe assumes that passage of the Bill through Parliament has already occurred before this date 

 

 

COVID-19 Coronavirus: relief for financial advice 

In ASFA Action issue 749, we reported that ASIC had announced temporary measures to help the industry provide consumers with affordable and timely advice during the COVID-19 pandemic. This comprised issuing: 

The no action position for superannuation trustees expires when applications for early release can no longer be made. 

For the relief given by Instrument 2020/355, ASIC had indicated it would consider market developments and provide notice to the industry before setting an expiry date. ASIC has now registered ASIC Corporations (Amendment) Instrument 2020/565, which specifies that the relief will cease to have effect on 15 October 2020. 

 

 

COVID-19 Coronavirus: ASIC guidance on board oversight of executive variable pay 

In 2019, ASIC conducted a review of board oversight of variable remuneration schemes. The review was designed to: 

The final report on ASIC’s findings is intended to be released later this year. However, ASIC has released information sheet 245 Board oversight of executive variable pay decisions during the COVID-19 pandemic that draws on the review’s factual findings. The information sheet focuses on: 

 

 

COVID-19 Coronavirus: ASIC interim corporate plan 

ASIC has published an Interim Corporate Plan for 2020-21. This outlines the strategic priorities that will guide ASIC’s work in responding to the impact of the COVID-19 pandemic. ASIC plans to publish more details on their longer-term priorities later this year in their corporate plan for 2020-24. 

ASIC will focus on five priorities to address the challenges presented by the COVID-19 pandemic: 

  1. Protecting consumers from harm at a time of heightened vulnerability 
  2. Maintaining financial system resilience and stability 
  3. Supporting Australian businesses to respond to the effects of the COVID-19 pandemic 
  4. Continuing to identify, disrupt and take enforcement action against the most harmful conduct 
  5. Continuing to build our organisational capacity in challenging times 

 

 

Superannuation bills update 

Parliament has made some progress on a number of bills that are relevant to superannuation. 

The Treasury Laws Amendment (2019 Measures No.3) Bill 2019 was passed by the Senate with amendments that were not accepted by the House of Representatives, and is now awaiting reconsideration by the Senate. This omnibus bill contains amendments to several aspects of the superannuation and related tax legislation, including in relation to: 

The Senate’s amendments do not involve the superannuation-related measures in the Bill. See ASFA Action issue 730 for background on this bill. 

The package of bills to amend the framework for the financial institutions supervisory levy (the APRA levy) has been passed by the House of Representatives without amendment and awaits consideration by the Senate. The package includes the Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020, the Superannuation Supervisory Levy Imposition Amendment Bill 2020 and the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020. See ASFA Action issue 755 for background on this bill. 

 

 

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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