Issue 794, 23 February 2021
In this issue:
- Your Future, Your Super Bill: Senate Committee inquiry
- Review of the Australian Financial Complaints Authority
- Prudential regulation of investment in Australia’s export industries: inquiry
- Virtual meetings and electronic document execution: relief extended
- Royal Commission implementation: bill and regulations
- Family Court reforms: flow-on impact for superannuation splitting
- Single Touch Payroll reporting: employer reporting about super contributions
- Insurance in Superannuation Voluntary Code of Practice – vulnerable consumer consultation
- Derivatives transaction reporting rules: extension of deadline for ASIC consultation
Your Future, Your Super Bill: Senate Committee inquiry
As reported in ASFA Action issue 793, the Government has introduced into Parliament the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. The Bill implements the ‘Your Future, Your Super’ (YFYS) reforms announced in the October 2020 Budget.
The YFYS reforms contain measures to address underperformance of superannuation products, ‘stapling’ of members to superannuation funds and imposes a ‘best financial interests’ duty on trustees. The Bill also contains some amendments in relation to portfolio holdings disclosure that were not part of the Budget announcement.
The Bill has been referred to the Senate Economics Legislation Committee for inquiry and report by 22 April. Submissions are due by 18 March.
If you have any feedback you would like ASFA to consider in relation to the Bill, please forward it to Fiona Galbraith by close of business Friday 5 March.
Review of the Australian Financial Complaints Authority
The Government has announced a review of the external dispute resolution (EDR) body for the financial services industry, the Australian Financial Complaints Authority (AFCA).
The legislation underpinning the establishment of AFCA required an independent review to be undertaken as soon as practicable after 18 months of operation. The review was due to be undertaken last year but was deferred given the impact of the Coronavirus pandemic. The review will be conducted by Treasury, with a report to be finalised and presented to the Minister by 30 June.
The terms of reference note that the review provides an opportunity for feedback on the operation of AFCA since its establishment and to consider whether further enhancements should be made to ensure the EDR scheme is appropriately calibrated and operating effectively. The framework legislation requires the review to consider whether AFCA has been effective in resolving complaints in a way that is fair, efficient, timely and independent.
Of relevance to superannuation complaints, the terms of reference raise the following questions:
- Is AFCA meeting its statutory objective of resolving complaints in a way that is fair, efficient, timely and independent?
- Is AFCA’s dispute resolution approach and capability producing consistent, predictable and quality outcomes?
- Are AFCA’s processes for the identification and appropriate response to systemic issues arising from complaints effective?
- Do AFCA’s funding and fee structures impact competition? Are there enhancements to the funding model that should be considered by AFCA to alleviate any impacts on competition while balancing the need for a sustainable fee-for-service model?
- AFCA’s Independent Assessor has the ability to review complaints about the standard of service provided by AFCA in resolving complaints. The Independent Assessor does not have the power to review the merits or substance of an AFCA decision.
- Is the scope, remit and operation of AFCA’s Independent Assessor function appropriate and effective?
- Is there a need for AFCA to have an internal mechanism where the substance of its decision can be reviewed? How should any such mechanism operate to ensure that consumers and small businesses have access to timely decisions by AFCA?
If you, or a member of your organisation would be interested in participating in a working group discussion in relation to the review, please contact Julia Stannard by close of business Thursday 25 February. (Please note – representation is available to ASFA corporate members only.)
If you have any feedback you would like ASFA to consider in relation to the review of AFCA, please forward it to Julia Stannard by close of business Friday 12 March.
Prudential regulation of investment in Australia’s export industries: inquiry
A new Parliamentary inquiry has been commenced into the prudential regulation of investment in Australia’s export industries.
The inquiry, to be undertaken by the Joint Standing Committee on Trade and Investment Growth, will investigate the potential impact on investment opportunities for Australian exporters of changes in practices by banks, insurers and superannuation funds. It will also look at the advice and guidance provided by financial regulators which affects the investment opportunities for Australian exporters.
A reporting date for the inquiry has not yet been announced, however the Committee is seeking submissions by 31 March 2021.
If you have any feedback you would like ASFA to consider in relation to the inquiry, please forward it to Andrew Craston by close of business Friday 12 March.
Virtual meetings and electronic document execution: relief extended
The Government has introduced into Parliament a Bill to extend relief granted on a temporary basis during the COVID-19 pandemic to ensure companies can validly execute documents electronically and can conduct virtual meetings.
The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 will extend from 21 March 2021 to 15 September 2021 the expiry date of the temporary relief allowing companies to use technology to meet regulatory requirements to hold meetings, such as annual general meetings (AGMs), distribute meeting-related materials and validly execute documents.
The Government will finalise permanent changes to allow electronically signing and sending documents prior to the expiry of these temporary arrangements on 15 September. Following 15 September 2021, member meetings will need to be conducted consistent with pre-COVID-19 laws which require an in-person meeting to be held. However, the Government has indicated that it will conduct an opt-in pilot for companies to hold hybrid AGMs, to enable a proper assessment of the shareholder benefits of virtual meetings.
The amendments will be relevant to the way in which superannuation trustee companies manage their general obligations under the Corporations Act 2001.
The Bill has been referred to the Senate Economics Legislation Committee for inquiry and report by 12 March. The Committee is seeking submissions by close of business Monday 1 March.
See ASFA Action issues 781, 779, 776, 769 and 754 for details of the temporary relief and the Government’s consultation on making the relief permanent.
Royal Commission implementation: bill and regulations
As reported in ASFA Action issue 787, the Government has introduced into Parliament the Financial Sector Reform (Hayne Royal Commission Response No 2) Bill 2020. The Bill implements a number of recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in relation to charging for financial advice, including deduction of advice fees from superannuation accounts.
Last week, the Bill was passed by the House of Representatives without amendment and introduced into the Senate.
The Bill has not been referred to a Committee for inquiry. However, the Senate Standing Committee for the Scrutiny of Bills has considered the Bill and sought advice from the Treasurer on several matters in relation to the Bill, in particular:
- the justification for the significant maximum penalty for non-compliance with a proposed new record keeping requirement
- why it is considered necessary and appropriate to leave the scope of the recordkeeping obligations, which are subject to significant penalties, to delegated legislation
- whether the Bill can be amended to include at least high-level guidance regarding the scope and type of records that must be kept on the face of the primary legislation.
Last week the Government made regulations to support some of the Royal Commission related reforms implemented late last year by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020.
The Financial Sector Reform (Hayne Royal Commission Response) (2021 Measures No. 1) Regulations 2021 were registered on 18 February.
to insurance claims handling and removing regulation 7.1.33 of the Corporations Regulations 2001 to make claims handling a ‘financial service’. This will mean that someone who handles insurance claims will be required to:
- hold an Australian financial services licence
- act efficiently, honestly and fairly (among other obligations)
- provide appropriate disclosure to consumers.
This may be of relevance to superannuation trustees as ASIC is likely to take these reforms into consideration when determining how claims handling obligations are to be defined for trustees providing a ‘superannuation trustee service’ (see ASFA Action issue 786 for more information).
If you require further information please contact Byron Addison, Senior Policy Adviser, on (02) 8079 0834.
Family Court reforms: flow-on impact for superannuation splitting
Parliament has passed bills that substantially reform the court structure that supports the Family Law Act 1975. This is likely to have some minor flow-on impacts for the making of court orders in relation to splitting of superannuation interests.
The Federal Circuit and Family Court of Australia Bill 2019 and the Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Bill 2019 were introduced in December 2019 and completed their passage through Parliament last week.
Together, these Bills unify the administrative structure of the Family Court of Australia and the Federal Circuit Court of Australia to create the Federal Circuit and Family Court of Australia. The new Court will have two divisions – one will be a continuation of the Family Court and the other a continuation of the Federal Circuit Court.
The family law superannuation splitting regime provides for superannuation interests to be taken into account as part of a financial agreement or a court order where spouses have divorced or (if certain conditions are met) have separated. The reforms to the court structure will mean that superannuation fund trustees will receive relevant court orders—including splitting and flagging orders—made by the new Court. Trustees will need to ensure their administrative processes and systems are updated to accommodate this change.
The reforms made by the Bills will take effect six months after Royal Assent, unless an earlier commencement date is fixed by proclamation.
Single Touch Payroll reporting: employer reporting about super contributions
The ATO has made a legislative instrument modifying the information that an employer is required to report under the Single Touch Payroll (STP) in relation to superannuation contributions made for employees.
The Treasury Laws Amendment (2018 Measures No. 4) Act 2019 included measures requiring employers to report salary sacrificed amounts paid to their employees’ superannuation funds under the STP regime. The commencement date for those measures was updated by amendments contained in the Treasury Laws Amendment (2019 Measures No. 3) Act 2020. (See ASFA Action issues 760, 759, 730, 698 and 665) for background). Together, those Acts changed the way that Superannuation Guarantee contributions are required to be calculated and reported in relation to amounts salary sacrificed to superannuation.
The ATO has registered the Taxation Administration – Single Touch Payroll – Amounts to be Notified Determination 2021 (STP 2021/1) to facilitate amendment of the approved form for STP reporting, to give effect to the changes. The ATO had initially proposed a start date of 1 July 2021 but will now require employers to report the expanded data set by 1 January 2022.
The Determination repeals an earlier legislative instrument on STP reporting, Single Touch Payroll – Determination of Amounts to be Notified, registered in February 2019.
Insurance in Superannuation Voluntary Code of Practice – vulnerable consumer consultation
In 2020 the ‘Insurance in Superannuation Voluntary Code of Practice’ (ISVCoP) owners, AIST, ASFA and the FSC initiated a review into the vulnerable member provisions of the ISVCoP. The Code owners convened a working group, comprising of superannuation funds, insurers, and service providers to ensure the Code was appropriately responding to the needs of vulnerable members.
The Code owners are now consulting on the changes to the Code recommended by the working group. The proposed changes can be found here and further information about the consultation can be found here.
The consultation period ends at 5.00 pm on 29 March.
If you have any questions about the vulnerable consumer consultation, please contact Byron Addison, Senior Policy Adviser, (on) 02 8079 0834.
Derivatives transaction reporting rules: extension of deadline for ASIC consultation
As advised in ASFA Action issue 791, ASIC has released Consultation Paper 334 Proposed changes to simplify the ASIC Derivative Transaction Rules (Reporting): First consultation (CP 334).
Originally feedback was requested by 1 March, however, ASIC has just advised that it has received a number of requests to extend the deadline for providing feedback and have decided to extend the closing date by two weeks to 15 March.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
