Issue 879, 22 November 2022
In this issue:
Investment governance: APRA consultation on guidance
APRA has commenced consultation on updated guidance on investment governance for superannuation trustees.
The new guidance is intended to assist trustees in meeting their requirements under the revised prudential standard SPS 530 Investment Governance, which was finalised in July and comes into effect on 1 January 2023 (see ASFA Action issues 861 and 827 for background).
Draft Prudential Practice Guide SPG 530 Investment Governance includes new and additional guidance on:
- the new requirements in SPS 530, including for liquidity management, stress testing and valuations practices
- APRA’s expectations of how trustees will consider environmental, social and governance risk factors as part of their overall investment risk management.
APRA expects to finalise SPG 530 in the second quarter of 2023. Noting that this means the updated guidance will not be in place when SPS 530 commences on 1 January, APRA has stated:
APRA received some feedback from regulated entities raising concerns over the effective date for updated SPS 530 on 1 January 2023, which occurs before draft SPG 530 will be finalised.
It is APRA’s view that the updated requirements in SPS 530 reflect, in many cases, existing industry practices and existing investment governance guidance. APRA therefore expects that prudent RSE licensees would be in a position to meet updated SPS 530 from 1 January 2023, supported where needed by the existing guidance in current SPG 530 and SPG 531. APRA’s supervisory approach, however, will take into account that draft SPG 530 is yet to be finalised.
APRA has noted that, following the finalisation of SPG 530, it will be engaging with RSE licensees on their approach to implementing SPS 530 in the second half of 2023.
APRA is seeking feedback on the draft guidance by close of business Friday 17 March.
Improving the integrity of off-market share buy-backs: consultation
The Government has released exposure draft legislation to implement the announcement in the October Budget to align the tax treatment of off-market share buy-backs undertaken by listed public companies with the tax treatment of on-market share buy-backs.
The draft legislation is intended to ensure that where a listed public company undertakes an off-market share buy-back of a share or non-share equity interest, no part of the purchase price in response of the buy-back will be taken to be a dividend.
Additionally, distributions by listed public company that are considered consideration for the cancellation of a membership interest as part of a selective reduction of capital will now be unfrankable.
Treasury is seeking comments on the draft legislation by close of business Friday 9 December.
YFYS performance test for faith-based products: Senate Committee report
The Senate Economics Legislation Committee has tabled its report into the Taxation Laws Amendment (2022 Measures No 3) Bill 2022. Of relevance to superannuation, the Bill includes amendments to modify the Your Future, Your Super (YFYS) performance test for faith-based superannuation products.
The majority Committee report recommends that the Bill be passed.
A dissenting report from the Coalition Senators recommended:
- the performance test amendment should not proceed and that the “MySuper performance testing regime should remain solely focused on the best financial returns for members, without exception
- the performance test should only be extended to trustee-directed products
- a supplementary annual performance test for faith-based products should only be considered pending the outcome of the YFYS Review currently being conducted by Treasury.
Australian Greens Senator McKim recommended that:
- the performance test amendment should be opposed and consideration of alternative performance tests for all values-based superannuation should be deferred until the YFYS review is completed, or
- the currently proposed measure should be amended to allow all values-based products to apply to use a supplementary performance test, and to ensure all faith-based superannuation products are able to be assessed.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
