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Issue 718, 21 August 2019 
In this issue: 

 

Financial Institutions Supervisory Levy Methodology – Treasury consultation 

Treasury has released a discussion paper on the design and operation of the financial institutions supervisory levy. 

The levy was introduced in 1998 to recover most of the operational costs of APRA, as well as specific costs incurred by certain Commonwealth agencies and departments, from regulated entities including superannuation fund trustees. Since its introduction, the scope of the levy has expanded to include a broader range of activities relating to the financial services sector. 

Treasury is now seeking views on the design and operation of the levy, to inform future consideration of the levies and changes to legislation that underpin the levies framework. This consultation is separate to the annual ‘Proposed Financial Institutions Supervisory Levies’ paper released each year. (Refer ASFA Action issues 710 and 714 in relation to the 2019-20 levy.) 

If you have any feedback or input you would like ASFA to consider in relation to the levy methodology, please forward it to Fiona Galbraith by close of business Monday 2 September. 

 

 

Whistleblower policies: consultation 

ASIC has commenced a consultation on proposed guidance regarding new obligations in relation to whistleblower policies. 

A range of entities, including corporate trustees of registrable superannuation entities (RSEs), must implement a whistleblower policy and make it available to their officers and employees by 1 January 2020. This requirement was introduced as part of the reforms to the corporate and financial sector whistleblower regime that commenced on 1 July 2019 (see ASFA Action issues 654 and 699 for details). 

As part of its consultation, ASIC has released a draft Regulatory Guide, explaining how companies can establish, implement and maintain a whistleblower policy. The guide covers the information that entities must include in their policy, including how they will support and protect whistleblowers and handle and investigate whistleblower disclosures. 

ASIC is seeking comments by 18 September 2019. 

ASIC has also updated its website to provide two new information sheets about whistleblower protections: 

 

 

Royal Commission: Government’s implementation roadmap 

The Government has released a roadmap outlining its plans to implement its response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

The Government’s response to the Royal Commission was released on 4 February, along with the Commission’s final report (see ASFA Action issue 697 for more details). 

The final report made 76 recommendations for reform, 54 of which were directed to the Government, with more than 40 requiring legislative change. In addition to the Commission’s 76 recommendations, the Government in its response announced a further 18 commitments to address issues raised in the Final Report. 

According to the Treasurer, the Hon Josh Frydenberg MP, the Government has to date implemented 8 out of the 54 Commission recommendations as well as 7 of the Government’s 18 additional commitments. Progress has also been made on a further 5 recommendations with draft legislation either introduced to the Parliament, released for comment or detailed consultation papers issued. 

The Treasurer has indicated there are currently 24 streams of work underway in Treasury that are progressing the Government’s commitments to the Royal Commission. An additional $9.3 million will be provided to the Treasury and the Office of Parliamentary Counsel this year to ensure that the Government’s timetable can be met, in addition to the $12.1 million that was already provided in the April 2019 Budget. It is anticipated that giving effect to the Implementation Plan will take up 75 per cent of Treasury’s legislative agenda over the next year. 

In terms of the major recommendations and commitments with particular relevance to superannuation, the implementation roadmap notes as follows: 

One default superannuation account (recommendation 3.5)  Implementation of this recommendation will be considered in the context of the findings and recommendations of the Productivity Commission’s report Superannuation: Assessing Efficiency and Competitiveness 
Prohibit ‘treating’ of employers (recommendation 3.6) and increase civil penalties for breach of covenants and like obligations (recommendation 3.7)  These changes were implemented as part of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019, (see ASFA Action issues 698, 704). 
Review the merits of universal terms for MySuper products (recommendation 4.13)  Consultation was undertaken in March-April (see ASFA Action issue 702). The Government is considering its response. 
Expand AFCA’s remit to consider past disputes (additional commitment in response to Recommendation 7.1)  AFCA’s remit has been extended to consider financial complaints dating back to 1 January 2008 (see ASFA Actions issues 699, 700, 701, and 712. AFCA commenced receiving legacy complaints from 1 July 2019. 
Undertake an APRA capability review (recommendation 6.13)  A capability review of APRA has been undertaken and the responses of the Government and APRA have been published (see ASFA Action issues 701 and 716). 
Consult on superannuation binding death benefit nominations for Indigenous people (additional commitment)  Consultation was undertaken in March-May (see ASFA Action issue 704). The Government is considering its response. 
Strengthen ASIC’s powers in relation to search warrants, telecommunications interception, licensing and banning of people from the financial sector (additional commitments to implement recommendations from the ASIC Enforcement Review Taskforce)  Legislation to implement these commitments is expected to be consulted on and introduced by the end of 2019. 
Prohibit trustees of RSEs from taking on any other role or office (recommendation 3.1)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Ban deduction of advice fees from MySuper accounts (recommendation 3.2)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Limit deduction of advice fees from choice superannuation accounts (recommendation 3.3)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Ban hawking of superannuation products (recommendation 3.4)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Adjust APRA’s and ASIC’s roles in superannuation—including setting general principles for co-regulation of superannuation and making ASIC the conduct regulator for superannuation (recommendations 3.8, 6.3, 6.4, 6.5)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Strengthen financial regulators—including statutory obligations for APRA and ASIC to co-operate and share information and a new oversight authority for APRA and ASIC (recommendations 6.9, 6.14)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Improve the ASIC breach reporting regime (as recommended by the ASIC Enforcement Review Taskforce) (recommendation 7.2)  Legislation is expected to be consulted on and introduced by 30 June 2020. 
Compensation scheme of last resort (recommendation 7.1)  Legislation is expected to be consulted on and introduced by the end of 2020. 
Extension of the Banking Executive Accountability Regime (BEAR) to RSE licensees and joint administration of the BEAR by APRA and ASIC (recommendations 3.9, 6.6, 6.7)  Legislation is expected to be consulted on and introduced by the end of 2020. 
Increasing AFCA’s role in remediation programs (additional commitment in response to Recommendation 7.1)  Legislation is expected to be introduced by mid-2021 

Separately, APRA has provided an update on its progress in implementing those Royal Commission recommendations that were directed to it. 

 

 

SMSF rollovers in SuperStream: deferral 

The Government has made regulations deferring the application of SuperStream to 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 Government has now registered the Treasury Laws Amendment (Deferring Extension of SuperStream to Self Managed Superannuation Funds) Regulations 2019 to give effect to the deferral. 

 

 

ASFA REGULATORY WATCHLIST

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

and other regulatory announcements relevant to superannuation.

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