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Issue 691, 20 November 2018 
In this issue: 


Women’s economic security statement 

The Minister for Jobs and Industrial Relations and Minister for Women, the Hon Kelly O’Dwyer MP, has released the Government’s Women’s Economic Security Statement 2018. Among other things, the statement announces measures to support women’s economic independence, including extending early release of superannuation for victims of domestic and family violence and improving the visibility of superannuation assets in family law proceedings. 


Early access to super on domestic violence grounds 

While superannuation should ideally be preserved until retirement, the Government considers family and domestic violence to be an immediate and extreme circumstance where the benefits today outweigh the benefits of maintaining those savings until retirement. Accordingly, the Government will extend the ability to access early release of superannuation to victims of family and domestic violence. 


Better visibility over superannuation assets in family law proceedings 

The Government has noted that where parties to family law proceedings are not forthcoming about their assets, costly and time-consuming information gathering exercises are required in order to establish the identification of superannuation accounts. To address this, an electronic information sharing mechanism will be developed between the Australian Taxation Office and the Family Law Courts. This will allow superannuation assets, held by the parties to family law proceedings, to be identified swiftly and more accurately. 



Royal Commission round 7 hearings 

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has commenced its seventh and final round of hearings, addressing policy questions arising from the first six rounds. 

The ASFA team is closely monitoring the Commission’s proceedings and will provide a brief summary of the hearings when superannuation is discussed. Members will be able to access these updates on the ASFA website, via this link. 



Superannuation reforms: Assistant Treasurer’s speech at ASFA Conference 

In a speech at the ASFA Conference, the Assistant Treasurer, the Hon Stuart Robert MP, outlined the legislative agenda for several of the Government’s superannuation reform packages, along with proposed amendments to some of these reforms. 

The reform packages discussed by the Assistant Treasurer were: 

The Government’s proposed amendments are: 

While the Assistant Treasurer suggested during his speech that the tabling of the amendments and debate on the bills was imminent, the bills were ultimately not brought on for debate in the sitting week 12-15 November. The remaining sitting weeks for 2018 are 26-29 November and 3-6 December. 



APRA’s ‘strengthening member outcomes’ package: commencement to be deferred 

APRA has advised ASFA that it intends to defer the commencement date of changes to its prudential standards proposed in its December 2017 Strengthening member outcomesconsultation package. The package was intended to commence on 1 January 2019 (see ASFA Action issues 690 and 655). 

As noted in ASFA Action issue 690, APRA recently indicated that it would “release the final package of changes once the status of the Member Outcomes Bill, which is currently before the Parliament, is known”. APRA’s reference to the ‘Member Outcomes Bill’ relates to the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017. 

APRA has since provided the following additional update to ASFA: 

APRA generally provides at least six months for regulated institutions to prepare for implementation from the time that final requirements are released. Accordingly, as the final prudential standards are yet to be released, the 1 January 2019 commencement date will be deferred. 



Section 29QC ‘consistency of disclosure’: ASIC to defer commencement 

ASIC has indicated that it intends to defer the commencement date for the ‘consistency of disclosure’ requirements in section 29QC of the Superannuation Industry (Supervision) Act 1993, which were due to take effect on 1 January 2019. 

To promote systemic transparency, subsection 29QC(1) requires a Registrable Superannuation Entity (RSE) licensee to ensure that, where it is required to give information to APRA under a reporting standard that requires the information to be calculated in a particular way, and where the same or equivalent information is given to other persons, the information given to the other person is calculated in the same way as the information given to APRA. 

While subsection 29QC(1) was originally intended to commence on 1 July 2013, ASIC subsequently issued a number of extensions to ensure that the requirements appropriately aligned with APRA’s reporting standards, the proposed choice product dashboard rules and the expanded fee and cost disclosure rules. The most recent extension deferred commencement until 1 January 2019 (see ASFA Action issue 617 for background). 

ASIC has now provided ASFA with an update on its proposed timing for the commencement of section 29QC, as follows: 

Section 29QC of the SIS Act is deferred until 1 January 2019. It was deferred to allow the Choice product dashboard requirements to be settled. 

ASIC recognises that it is not practical for the provision to commence on 1 January 2019 and will shortly be issuing an instrument to defer this further. Consistently with the approach taken earlier this year in relation to shorter PDS and employer sub-plans we propose to defer for the maximum amount of time permitted under sunsetting legislation and then revoke as appropriate. ASIC’s deferral will give time for the policy position to be settled. 



Information security: new APRA prudential standard 

APRA recently finalised a new prudential standard on information security management, that will apply to all APRA-regulated entities—including superannuation funds—from 1 July 2019. 

The new Prudential Standard CPS 234 Information Security is intended to strengthen the resilience of APRA-regulated entities’ against information security incidents including cyber-attacks, and their ability to respond swiftly and effectively in the event of a breach. 

CPS 234 requires APRA-regulated entities to: 

APRA will shortly update Prudential Practice Guide CPG 234 Management of Information and Information Technology to reflect the requirements of CPS 234. 

The release of the final standard follows consultation on a discussion paper earlier this year (see ASFA Action issue 663). APRA notes that it has made several amendments in response to submissions received during the consultation. These include clarifying requirements for information assets managed by third parties and modifying the timeframes for notifying APRA of information security incidents and material information security control weaknesses. APRA has now also published a response to the submissions paper, which outlines the final form of the standard. 

Announcing the release of CPS 234, APRA Executive Board Member Geoff Summerhayes said: 

A significant information security breach at an APRA-regulated entity is almost certainly a question of when – not if. In a worst-case scenario, a major breach could even force a company out of business. As a result, APRA is fast-tracking implementation of this standard, and expects all regulated entities to meet its requirements by 1 July next year. 

By introducing CPS 234, APRA aims to ensure all regulated entities develop and maintain information security capabilities that reflect the importance of the data they hold, and the significance of the threats they face. 



AFCA update 

As outlined in ASFA Action issues 690, 686 and 688, ASIC recently extended the period for Australian Financial Services (AFS) licensees to notify ASIC of the change of their external dispute resolution details in relation to the commencement of the AFCA. This notification must be made by 30 November 2018. The appropriate format for this notification is ASIC’s form FS20 Change of details for an Australian financial services licence and can be completed via ASIC’s AFS licensee portal. 

ASIC recently issued a media release reminding AFS licensees to ensure they meet this notification deadline, to avoid incurring late fees. ASIC has noted that when completing the FS20, AFCA members who were previously members of the Financial Ombudsman Service (FOS) “should enter a commencement date of 1 May 2018. The commencement date should be the same date as the effective date.” (This is because the transition of the organisation and membership base of FOS to AFCA took effect from 1 May 2018.) 



APRA enforcement strategy review 

APRA has announced the terms of reference for a review of its enforcement strategy, in recognition of new regulatory responsibilities under the Banking Executive Accounting Regime, as well as case studies examined by the Royal Commission. 

The Review will be led by APRA Deputy Chair John Lonsdale, supported by APRA staff and external advisers as necessary. Mr Lonsdale will be assisted by an independent advisory panel of experts in the administration of law and regulatory enforcement. 

The Review will examine APRA’s current enforcement strategy and infrastructure and how it interacts with APRA’s core supervisory approach. Mr Lonsdale said: 

The Review will be a forward-looking examination of APRA’s approach to its enforcement powers to ensure that financial promises made by supervised institutions are met within a stable, efficient and competitive financial system. 

APRA has taken a range of supervisory actions over many years but it is timely to examine whether APRA’s traditional approach – prioritising prevention and rectification – can be augmented by greater enforcement activity. This review presents an opportunity for APRA to strengthen further its supervisory toolkit and reinforce sound prudential outcomes. 

Draft recommendations will be available to APRA Members by 28 February 2019 with the final Review to be presented to the APRA Members by 31 March 2019. Following consideration of the Review’s recommendations, APRA expects to release publicly both the final Review and APRA’s enforcement strategy. 



Consumer protection in financial services: Parliamentary committee report 

A Parliamentary committee looking into consumer protection in financial services has tabled a majority report recommending that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry be given an extension of time to report. 

The Senate Economics References Committee has been inquiring into the regulatory framework for the protection of consumers, including small businesses, in the banking, insurance and financial services sector since late 2016 (see ASFA Action issue 614). 

The Committee’s report, tabled on 15 November, comprises a majority report primarily authored by senators from the ALP, with additional (dissenting) comments by Coalition senators and a dissenting report by senators from the Australian Greens. 

Relevant recommendations from the majority report include that the Commonwealth Government should: 



Prosecution of criminal misconduct by financial institutions: funding and review 

The Government has announced that it will provide additional funding to the Commonwealth Director of Public Prosecutions (CDPP) and the Federal Court of Australia to enable further prosecutions of criminal misconduct by banks and other financial institutions and to ensure civil claims are dealt with effectively and expeditiously. The Government will also review whether the Federal Court’s criminal jurisdiction should be expanded to include corporate crime and establish regular cross-agency meetings to discuss enforcement matters in the sector. 

Increased enforcement activity flowing from a recent increase to ASIC’s funding (see ASFA Action issue 682) is expected to give rise to more prosecutions by the CDPP and more civil corporate misconduct cases before the Federal Court. This includes cases highlighted by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

The funding increase now announced by the Government will involve: 

The Government has also asked the Attorney-General’s Department (AGD) to conduct a review of whether the Federal Court’s criminal jurisdiction should be expanded to include corporate crime. Any criminal prosecutions for misconduct by banks and other financial institutions are currently heard in state courts and hence must compete with state cases for resources and scheduling. The creation of this additional criminal jurisdiction in the Federal Court would allow these prosecutions to be prioritised and penalties for breaches of the law to be handed out faster. The AGD will consult with relevant stakeholders including the states in undertaking the review and provide its report to the Government in January next year. 

Further, the Government will establish a Committee of Regulatory Enforcement Strategy chaired by the AGD and comprising representatives from the relevant agencies that regulate the financial services sector. These agencies will meet on a regular basis to discuss enforcement matters in the sector and provide feedback to the Government on regulatory and civil enforcement policy. 



Downsizer contributions: ATO ruling and guidance 

The ATO has issued a new ruling and guidance note on the superannuation ‘downsizer’ measure. 

The ‘downsizer’ measure allows eligible individuals aged 65 and older to make a contribution to superannuation from the sale proceeds of their main residence, with the ‘downsizer contribution’ not counted against the individual’s non-concessional contributions cap. The measure was announced in the May 2017 Budget and implemented via the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Act 2017 (see ASFA Action issues 678, 663, 643, 638, 627 and 654). 

The ATO has now issued a new ruling and guidance note on the downsizer measure. 

Super Guidance Note SPR GN 2018/2Downsizer contribution provides guidance for individuals who may be considering contributing under the downsizer measure. 

Law Companion Ruling LCR 2018/9Housing affordability measures: contributing the proceeds of downsizing to superannuation discusses downsizer contributions and how the downsizer measure interacts with other income tax and superannuation concepts including: 




ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations

and other regulatory announcements relevant to superannuation.

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