Issue 814, 20 July 2021
In this issue:
- Financial Service Royal Commission – Financial Accountability Regime (FAR) Exposure Draft Legislation: consultation
- Financial Services Royal Commission – Compensation Scheme of Last Resort (CSLR) Exposure Draft Legislation: consultation
- Retirement Income Covenant: Position Paper consultation
- ASIC: Example Record of Advice
- ASIC Report: Ending Grandfathered Conflicted Remuneration
- APRA: additional FAQs for the Superannuation Data Transformation phase 1 reporting standards
- ASIC publishes Internal Dispute Resolution data dictionary and glossary
- Financial Services Royal Commission implementation: Regulations for Deferred Sales Model Exemptions
Financial Service Royal Commission – Financial Accountability Regime (FAR) Exposure Draft Legislation: consultation
Treasury has released a consultation package on the Financial Accountability Regime (FAR) that includes the following:
- Draft legislation and explanatory materials
- Information paper on joint administration of the FAR
- Policy paper on list of prescribed responsibilities and positions
- Questions and answers
The proposed FAR draft legislation implements Recommendations 3.9, 4.12, 6.6, 6.7 and 6.8 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which recommended the extension of the Banking Executive Accountability Regime (BEAR) to all APRA-regulated entities (see ASFA Action issue 697 for background).
The release of the consultation package follows the release of Treasury’s proposal paper ‘Implementing Royal Commission
Recommendations 3.9, 4.12, 6.6, 6.7 and 6.8: Financial Accountability Regime’ in January 2020 (see ASFA Action issue 734 for background).
The FAR legislation is being prepared for introduction and passage in the 2021 Spring sittings of Parliament. It is proposed to commence for RSE licensees on the later day of 1 July 2023 or 18 months after the commencement of FAR.
If you have any feedback you would like ASFA to consider in relation to the consultation package, please forward it to Maggie Kaczmarska by close of business Friday 6 August.
Financial Services Royal Commission – Compensation Scheme of Last Resort (CSLR) Exposure Draft Legislation: consultation
Treasury has released a consultation package for a Compensation Scheme of Last Resort (CSLR) to be established in response to recommendation 7.1 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
This follows the release of a Treasury Discussion Paper in December 2019 (see ASFA Action 732 for further detail).
The CSLR package includes:
- A proposal paper
- A number of draft legislative instruments
- Explanatory materials
Treasury is seeking feedback from stakeholders on the following aspects of the CSLR in particular:
- scope;
- payment arrangements;
- funding arrangements;
- governance; and
- mechanisms to maintain the integrity of the scheme.
If you have any feedback you would like ASFA to consider in relation to the consultation package, please forward it to Byron Addison by close of business Friday 6 August.
Retirement Income Covenant: Position Paper consultation
Treasury is seeking feedback on a retirement income covenant position paper (see ASFA Action 756 for further background).
According to Treasury, the proposed retirement income covenant outlines a pathway to further develop the retirement phase of superannuation. The covenant will place a key obligation on trustees to formulate, review regularly and give effect to a retirement income strategy outlining how they plan to assist their members to balance key retirement income objectives.
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 Wednesday 28 July.
ASIC: Example Record of Advice
The Australian Securities and Investments Commission (ASIC) has prepared an example Record of Advice (ROA) to help financial advisers when they are providing advice under the temporary COVID-19 relief measure in ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2021/268 (COVID-19 instrument).
Under the COVID-19 relief measure, advisers can provide an ROA, rather than a Statement of Advice (SOA), to existing clients requiring financial advice due to the impact of the pandemic. The example ROA is annotated to help advisers understand the relevant requirements under the COVID-19 relief measure.
ASIC Report: Ending Grandfathered Conflicted Remuneration
ASIC has released its report Ending Grandfathered Conflicted Remuneration which investigates the industry’s transition away from grandfathered conflicted remuneration arrangements (see ASFA Action 719 for further background).
The report sets out ASIC’s findings as to the steps taken by industry participants from 1 July 2019 to 31 December 2020 to:
- End the payment of grandfathered conflicted remuneration ahead of the legal requirement to end these arrangements; and
- Pass previously grandfathered benefits on to product holders.
APRA: additional FAQs for the Superannuation Data Transformation phase 1 reporting standards
The Australian Prudential Regulation Authority (APRA) has published additional frequently asked questions (FAQs) for registrable superannuation entity (RSE) licensees to provide further guidance on meeting the Reporting Standards for Phase 1 of the Superannuation Data Transformation (see ASFA Actions 797, 804 and 806 for further background.
Included in the FAQs is a clarification on FAQ 1.09 for the historical reporting requirements to confirm that this applies to quarterly and annual reporting.
ASIC publishes Internal Dispute Resolution data dictionary and glossary
ASIC has released internal dispute resolution (IDR) reporting documents, which will be tested in a pilot involving financial firms from across relevant industry subsectors in late 2021.
The reporting documents include a data dictionary and data glossary. The data dictionary sets out the information that financial firms will be required to collect and report to ASIC. The data glossary provides explanations about the key terms in the data dictionary.
The pilot versions of the data dictionary and data glossary have been developed and substantially simplified through two rounds of public consultation. Key changes made in response to consultation include:
- remove free text fields
- remove mandatory reporting of demographic information and
- allow flexibility to including multiple products/services and issues per complaint.
ASIC recommends that financial firms should now consider how to map their own complaints systems to the data dictionary.
If you have any questions please contact Senior Policy Adviser, Julia Stannard.
Financial Services Royal Commission implementation: Regulations for Deferred Sales Model Exemptions
Treasury is consulting on regulations for Deferred Sales Model Exemptions and has released an exposure draft and explanatory statement (see ASFA Action 813 for further background).
The deferred sales model was introduced via the Financial Sector Reform (Hayne Royal Commission Response) Act 2020, which implemented part of the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Act provided for regulations to exempt classes of add-on insurance products where it would not be appropriate that they be captured by the deferred sales model.
The Government is now consulting on the regulations which confirm the classes of insurance products that will be exempt from the deferred sales model. The list of exempt classes includes “insurance sold within superannuation (including group life insurance)”.
Submissions are due by close of business Friday 6 August 2021.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
