Issue 805, 18 May 2021
In this issue:
- Royal Commission implementation: advice fee regulations
- Royal Commission implementation: Financial Regulator Assessment Authority bills
- APRA data collection: APRA Connect
- AFCA: new Chair
- SMSF rollovers: ASIC scam alert
Royal Commission implementation: advice fee regulations
The Government has made regulations supporting aspects of its response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021, passed by Parliament in late February, implemented the Government’s response to several Royal Commission recommendations. This included implementing reforms in response to:
- recommendation 2.1, regarding ongoing fee arrangements for financial advice
- recommendations 3.2, which prohibits superannuation trustees from deducting fees under an ongoing fee arrangement from a MySuper account
- recommendation 3.3, regarding limitations on deducting advice fees from choice accounts
The Government has now made the Financial Sector Reform (Hayne Royal Commission Response –Advice Fees) Regulations 2021 to support these reforms. The Regulations:
- specify the records that fee recipients must keep to evidence compliance with the obligations for ongoing arrangements
- amend the Electronic Transactions Regulations 2020 to enable written consents in relation to financial product advice fees paid out of a superannuation interest to be provided electronically.
The Regulations commence on 1 July 2021, in line with the amendments made by the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021.
Royal Commission implementation: Financial Regulator Assessment Authority bills
The Government has introduced into Parliament two Bills to create a new body designed to assess the effectiveness and capability of APRA and ASIC.
The Financial Regulator Assessment Authority Bill 2021 (FRAA Bill) establishes the Financial Regulator Assessment Authority (FRAA). The FRAA will consist of three independent statutory appointees together with the Treasury Secretary. Its key functions will be to:
- assess and report to the Minister, every two years, on APRA’s and ASIC’s effectiveness and capability
- report to the Minister, on request, on any matter relating to the effectiveness and capability of APRA and/or ASIC.
The FRAA will not be permitted to undertake assessments and reviews other than biennially or at the request of the Minister. Further, to ensure that the regulators’ operational independence is not unreasonably impacted, the FRAA will not have the ability to direct, make, assess or comment on specific cases of the regulators’ enforcement actions, regulatory decisions, complaints and like matters.
The FRAA Bill will commence the day after the Bill receives Royal Assent or 1 July 2021, whichever is later.
The Government has also introduced the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021. This includes amendments to a range of other Commonwealth Acts to reflect the establishment of the FRAA. Its commencement is timed to immediately follow the FRAA Bill.
Establishment of the FRAA is part of the Government’s response to recommendations 6.13 and 6.14 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (see ASFA Action issue 697).
APRA data collection: APRA Connect
APRA has published updated information to help regulated entities, including superannuation trustees, prepare for the new APRA Connect reporting environment, which is scheduled to go live on 13 September. The first data collections to be introduced in APRA Connect will be those required under phase 1 of the Superannuation Data Transformation project, due in September.
In particular, APRA has noted that:
- the APRA Connect test environment will be available for entities to start using from 17 June
- reporting entities are responsible for ensuring they set up their users and are able to submit information when it is due
- as a pre-requisite, entities must ensure that all users establish their digital identity through myGovID and are authorised by their organisation in Relationship Authorisation Manager (RAM) to access APRA services on its behalf
- a new Direct to APRA (D2A) form will be available shortly for entities to nominate an initial Regulatory Reporting Administrator for each ABN. Entities should take steps now to identify the appropriate person to be assigned the initial Administrator role in the test environment, who will have the responsibility to assign roles to other users from their entity in the test environment
- superannuation entities should be familiarising themselves now with the available technical information and supporting material relating to superannuation taxonomies.
AFCA: new Chair
The Board of the Australian Financial Complaints Authority (AFCA) has announced that Professor John Pollaers OAM has been appointed as its next Independent Chair. This follows the end of the term of office of the Hon Helen Coonan, AFCA’s inaugural Chair.
Prof Pollaers is Chancellor of Swinburne University of Technology, Chairman of the Australian Advanced Manufacturing Council and Chairman and Founder of Leef Independent Living Solutions Pty Ltd. He was formerly Chair of the Aged Care Workforce Strategy Taskforce for the Federal Government, Chairman of the Australian Industry and Skills Committee and a member of the Prime Minister’s Industry 4.0 Taskforce.
SMSF rollovers: ASIC scam alert
ASIC has asked ASFA to bring to our members attention some information published on the ASIC website about cold-calling scams involving purported rollovers to self-managed superannuation funds (SMSFs).
The information indicates ASIC has become aware of scams targeting Australians to establish a SMSF. As part of the scam, people are cold called or emailed and asked to transfer monies from an existing superannuation account to a new SMSF, with the monies instead diverted to bank accounts controlled by the scammers.
ASIC has suggested that trustees of APRA-regulated funds may wish to link to the ASIC webpage in their communications with members.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
