Issue 727, 19 November 2019
In this issue:
- BEAR extension to all RSE licensees: Royal Commission recommendation 3.9
- APRA superannuation data transformation project: consultation
- Heatmaps: APRA speech and methodology
- Putting Members’ Interests First: APRA guidance
- Unlawful underpayment of employees’ remuneration: Senate Committee inquiry
- Assistant Minister’s speech to 2019 ASFA Conference
- Superannuation update: APRA speech at ASFA Conference
- Review of TPD insurance: ASIC podcast
- Complaints handling: AFCA Datacube
- Whistleblower policies: ASIC guidance
BEAR extension to all RSE licensees: Royal Commission recommendation 3.9
One of the recommendations made in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) was to extend the Banking Executives Accountability Regime (BEAR) to all registrable superannuation entity (RSE) licensees (recommendations 3.9, 6.8). (See ASFA Action issue 697 for more details).
The Government has advised it plans to consult and introduce legislation to implement recommendation 3.9 by the end of 2020 (see ASFA Action issue 718 for more details).
APRA has also recently completed their consultation on proposed new prudential requirements for its regulated entities—including superannuation funds—in relation to remuneration (see ASFA Action issue 717 for more details).
ASFA will be facilitating a discussion group to consider implementation challenges and/or concerns with BEAR as it applies to RSE licensees. This includes consideration of the draft legislation when it is released for consultation and regulatory responses to recommendation 3.9.
If you are interested in joining the BEAR discussion group, please contact Maggie Kaczmarska by close of business Wednesday 25 November.
APRA superannuation data transformation project: consultation
APRA has launched a multi-year project to upgrade the breadth, depth and quality of its superannuation data collection, releasing a Discussion Paper which outlines the scope, objectives and approach to the Superannuation Data Transformation project.
Given the scale and complexity of the project, APRA has divided the consultation into three phases:
- Phase 1 (Breadth) will address the most urgent gaps in APRA’s data collection, particularly for choice products and investment options
- Phase 2 (Depth) will increase the granularity of the entire collection, taking advantage of APRA’s new Data Collection Solution (see ASFA Action issues 726, 717, 704, 682 and 662 for background) and enhanced data analytic capabilities
- Phase 3 (Quality) will assess the quality and consistency of the additional data reported during Phases 1 and 2, and review and address any implementation issues.
Each phase will involve the release of multiple topic papers, each covering a different aspect of the consultation.
APRA has released Topic Paper 1 (RSE Structure and Profile) as part of phase 1 of the project. Submissions for Topic Paper 1 close on Friday 17 January 2020.
If you have any feedback on Topic Paper 1 that you would like ASFA to consider, please forward it to Fiona Galbraith by close of business, Friday 6 December 2019.
Heatmaps: APRA speech and methodology
APRA has released an information paper on its forthcoming MySuper product heatmap.
The heatmap will comprise a set of metrics for every MySuper product:
- investment performance metrics for three and five-year time horizons, including for each stage of lifecycle products
- fee metrics for a range of representative member balances, including for administration fees and for total fees
- sustainability metrics, which will focus on the RSE level and include the number of member accounts and net cash flow.
The information paper includes the methodology for each metric, and the method by which metric outcomes for each product will be benchmarked.
For each product, metric outcomes will be coloured to show how outcomes compare with outcomes for peers or against benchmarks. APRA has made available a version of the heatmap using mock data to illustrate how to interpret the graduated colour scheme.
APRA is expected to publish the full product heatmap by mid-December.
APRA Deputy Chair, Helen Rowell, gave a detailed speech on the heatmap at the 2019 ASFA Conference.
If you have any questions, please contact Andrew Craston.
Putting Members’ Interests First: APRA guidance
APRA has released a letter to RSE Licensees and Frequently Asked Questions (FAQs) to clarify the application of the Putting Members’ Interests First (PMIF) reforms.
APRA understands the Government will seek to amend the SIS Act to provide that:
- the legislative requirements allow for the aggregation of a member’s interest in one or more products held within a superannuation account
- the rights of members under fixed term insurance cover are not affected, so that this type of insurance cover is not removed
- a member’s election to maintain insurance cover under the Protecting Your Super Package reforms is considered to be a valid election under the PMIF reforms, and vice versa.
APRA’s letter to RSE licensees also provides guidance for trustees wishing to make an election to maintain or take out insurance on an opt-out basis for members employed in a ‘dangerous occupation’ and how to withdraw that election.
If you have any questions, please contact Byron Addison.
Unlawful underpayment of employees’ remuneration: Senate Committee inquiry
The Senate has approved the establishment of a committee inquiry to examine the causes, extent and effects of unlawful non-payment or underpayment of employees’ remuneration by employers, and measures that can be taken to address the issue.
The Senate Economics References Committee has been directed to give particular consideration to matters including:
- the forms of and reasons for wage theft and whether it is regarded by some businesses as ‘a cost of doing business’
- the cost of wage and superannuation theft to the national economy
- the best means of identifying and uncovering wage and superannuation theft, including ensuring that those exposing wage/superannuation theft are adequately protected from adverse treatment
- the taxation treatment of people whose stolen wages are later repaid to them
- whether extension of liability and supply chain measures should be introduced to drive improved compliance with wage and superannuation-related laws
- the most effective means of recovering unpaid entitlements and deterring wage and superannuation theft, including changes to the existing legal framework that would assist with recovery and deterrence
- whether Federal Government procurement practices can be modified to ensure that public contracts are only awarded to those businesses that do not engage in wage and superannuation theft.
The committee is to report to the Senate by the last sitting day in June 2020 and is seeking submissions by 14 February.
Assistant Minister’s speech to 2019 ASFA Conference
In her speech at the 2019 ASFA Conference, The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator the Hon Jane Hume, covered a number of topical issues including:
- outcomes from the Government’s reform agenda, including the Protecting Your Super and Putting Members’ Interests First measures, the focus on underperformance including the member outcomes reforms and APRA’s new directions power
- the unrealised economies of scale within the industry, and the ‘myths’ that may be preventing fund mergers
- the Superannuation Guarantee amnesty.
Superannuation update: APRA speech to 2019 ASFA Conference
APRA Executive General Manager Suzanne Smith addressed a number of superannuation related matters in her speech at the 2019 ASFA Conference.
Ms Smith emphasised that the issues raised in APRA’s letter to trustees in late March (see ASFA Action issue 702) remain a priority, and provided a progress update on each, including:
- assessing and improving member outcomes
- trustee board capabilities and culture
- risk governance
- conflicts of interest
- data and reporting
- accountability and remuneration
- insurance in super.
Ms Smith also briefly outlined the areas APRA sees as important for next year and urged trustees to continue to deliver improved outcomes for members and make good judgements around the risk return trade-offs. She also explained APRA’s new organisational structure—due to take effect from 1 December—which will include a division dedicated to superannuation.
Review of TPD insurance: ASIC podcast
In October, ASIC published a report outlining the findings and recommendations from its thematic review of total and permanent disability (TPD) insurance in Australia (see ASFA Action issue 724).
ASIC has now uploaded to its a website a podcast discussion about what it expects insurers and superannuation trustees to do to address the poor consumer outcomes.
Whistleblower policies: ASIC guidance
ASIC has finalised guidance to assist public and proprietary companies, including trustees of RSEs, meet their obligation to have a whistleblower policy.
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 amended the whistleblower protections in the Corporations Act 2001 so a single, strengthened whistleblower protection regime covers the corporate, financial and credit sectors – including superannuation funds. It also brings the whistleblower laws in other financial system statutes into the Corporations Act 2001 and inserts a comprehensive regime into the tax legislation for the protection of individuals who report breaches of the tax laws or misconduct.
As part of the reforms, public companies, large proprietary companies, and proprietary companies that are trustees of RSEs must have a whistleblower policy available to their officers and employees by 1 January 2020.
ASIC has previously published two information sheets on whistleblower rights and protections and how ASIC will handle whistleblower reports (see ASFA Action issues 718, 699 and 654 for background).
ASIC has now published Regulatory Guide 270 Whistleblower policies to help impacted companies establish policies that support and protect whistleblowers. RG 270 sets out the components that a whistleblower policy must include to comply with the law. These include:
- types of matters covered by a policy
- who can make and receive a whistleblower disclosure
- how to make a disclosure
- legal and practical protections for disclosers
- investigating a disclosure
- ensuring fair treatment of individuals mentioned in a disclosure.
RG 270 also provides good practice guidance to assist companies develop and implement policies that are tailored to their operations.
ASIC plans to survey the whistleblower policies of a sample of companies next year to review compliance with the legal requirements.
Complaints handling: AFCA Datacube
The Australian Financial Complaints Authority (AFCA) has launched a new online comparative reporting tool allowing Australians to see how financial services providers— including APRA-regulated superannuation funds—have responded to consumer complaints brought to AFCA.
The AFCA Datacube includes information about the number of complaints received, how long it takes each AFCA member firm to resolve complaints and the number of times financial firms did not respond to a complaint. It also allows people to compare financial firms side-by-side.
AFCA is required by ASIC to publish information about the complaints it receives and resolves including by financial firm name, and to ensure it is comparable by business size and industry sector.
The Datacube contains AFCA’s data between 1 November 2019 and 30 June 2019 and will be updated every six months.
AFCA has also published its Annual Review 2018–19, covering its operation between 1 November 2018 and 30 June 2019.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
