Issue 714, 2 July 2019
In this issue:
- Product intervention power: ASIC consultation
- Complaints handling: reminder about ASIC consultation
- Information security: APRA guidance
- SMSF rollovers in SuperStream: deferral
- Life insurance claims handling: new APRA and ASIC data
- Supervisory levy for 2019˗20
- ASIC industry funding levy: estimated 2018-19 levies
- ATO tax withholding schedules
Product intervention power: ASIC consultation
ASIC has released a consultation package on the proposed administration of its new product intervention power.
The product intervention power allows ASIC to intervene and take temporary action where financial and credit products have resulted in or are likely to result in, significant consumer detriment. The power was implemented via the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 (see ASFA Action issues 704 and 686 for background) and commenced on 6 April.
The consultation package consists of Consultation Paper 313 Product intervention power and a draft regulatory guide setting out:
- the scope of the power
- when and how ASIC expects to use the power
- how a product intervention order will be made.
ASIC is seeking submissions on the consultation package by 7 August 2019 and aims to release its final regulatory guide in September 2019. A further, separate ASIC consultation on its proposed guidance on the design and distribution obligations will commence later this year.
Complaints handling: reminder about ASIC consultation
As reported in ASFA Action issue 708, ASIC is consulting on significant reforms to standards about how financial firms—including superannuation trustees—handle consumer complaints.
Some key elements of the new standards that ASIC is seeking feedback on include:
- maximum time frames for responding to a complaint – including a reduction in the internal dispute resolution timeframe for superannuation complaints from the current 90 days to 45 days
- what constitutes a ‘complaint’
- setting clear standards about what should be in written reasons for decisions
- strengthening the requirement that firms take a systemic focus to complaints handling
- the details of the new framework for reporting of complaints data to ASIC.
If you have any feedback that you would like ASFA to consider including in its response to ASIC, please forward it to Julia Stannard by close of business Friday, 12 July.
Information security: APRA guidance
APRA has released guidance for its regulated entities—including superannuation fund trustees—on managing information security risks, including cyber-crime.
Prudential Practice Guide CPG 234 Information Security replaces CPG 234 Management of Security Risk in Information and Information Technology. The updated guide will assist regulated entities to embed and comply with the requirements of APRA’s new cross-industry prudential standard, CPS 234 Information Security, which came into effect on 1 July.
As well as releasing CPG 234, APRA has published a letter to industry responding to submissions on the draft CPG 234 released for consultation in March. In the letter, APRA re-emphasised the need to maintain appropriate oversight of all third parties that manage information security on an entity’s behalf, including entities subject to existing regulatory oversight and service providers engaged by third party entities.
APRA Executive Board Member Geoff Summerhayes said that while many regulated entities are well advanced in implementation of CPS 234, APRA recognises that the new requirements “materially raise the bar across the entire industry and will take time to be fully effective”. APRA expects to see continuous improvement and has indicated that if an entity is not currently able to fully comply with the new standard, it should immediately advise its APRA supervisor.
SMSF rollovers in SuperStream: deferral
The Government has confirmed that it will defer the extension of SuperStream to self-managed superannuation fund (SMSF) rollovers from 30 November 2019 to 31 March 2021.
The extension of SuperStream to SMSF rollovers was initially announced in early 2018 and amending regulations registered in late September (see ASFA Action issues 688, 680 and 668 for background).
The Government announced in its May 2019 Budget that it would defer the extension, as part of a measure to amend SuperStream to incorporate electronic release authorities (see ASFA Action issue 703).
The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume has now confirmed that the Government will make regulations to give effect to the deferral “as soon as practicable”.
Life insurance claims handling: new APRA and ASIC data
In March 2019 APRA and ASIC launched a joint project with the aim of collecting and publishing high quality, consistent and transparent data about the life insurance industry (see ASFA Action issue 704). This includes an online comparative tool that allows the community to review an individual life insurer’s claims and disputes outcomes and compare them against other providers.
APRA has now released its latest Life Insurance Claims and Disputes Statistics publication, covering the period 1 January 2018 to 31 December 2018, and ASIC’s MoneySmart Life insurance claims comparison tool has been updated.
The data covers a range of measures and shows that the admittance rate across all cover types and distribution channels was 93 per cent in the reporting period. Specific data is provided for insurance cover provided through a superannuation fund.
The data will be updated every six months.
Supervisory levy for 2019˗20
The Government has determined the annual supervisory levy that will be imposed on superannuation entities for 2019-20.
The Superannuation Supervisory Levy Imposition Determination 2019 recovers the operational costs of APRA and other specific costs incurred by certain Commonwealth agencies and departments.
ASIC industry funding levy: estimated 2018-19 levies
ASIC has released a Cost Recovery Implementation Statement (CRIS) setting out the estimated industry sector levies for 2018-19, as well as details on how ASIC allocated its regulatory costs in 2017-18.
The indicative levies published in the final CRIS are intended to help ASIC related entities—including superannuation trustees—better plan for the actual levy which will not be billed until January 2020. The indicative levies are a guide and the amounts are likely to change when ASIC’s actual regulatory costs are known and published in December 2019 and the actual business activity metrics for each subsector are provided by regulated entities.
The CRIS includes:
- a forecast of ASIC’s regulatory costs and indicative levies for each subsector in 2018-19
- an outline of the work undertaken by ASIC for each subsector in 2018-19
- an explanation of the cost recovery model
- the actual expenses ASIC incurred in 2017–18 for each subsector and the variance between actual expenses and the estimated costs in last year’s CRIS.
- an explanation of the amendments to the levies and fees for service models since the release of last year’s CRIS
- an assessment of the risks associated with the industry funding model and how those risks have been managed.
The CRIS indicates that ASIC is budgeting for cost recovery of $13.725m from superannuation trustees in respect of 2018-19.
ATO tax withholding schedules
The ATO has registered a legislative instrument updating a range of tax withholding schedules with effect from 1 July.
The instrument, Taxation Administration Act Withholding Schedules 2019, makes the withholding schedules, specifying the amount, formulas and procedures to be used for working out the amount required to be withheld by an entity under the pay as you go. Of particular relevance for superannuation, the updated withholding tables include:
- Schedule 12 – Tax table for superannuation lump sums
- Schedule 13 – Tax table for superannuation income streams.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
