Search
Close this search box.
Issue 825, 23 September 2021 
In this issue: 

 

Insurance in superannuation: updates to prudential standards and guidance 

APRA has written to RSE licensees to provide an update on its consultation with industry about revisions to SPS 250 Insurance in Superannuation and related guidance. This consultation started in November 2019 and there was a further round in January 2021 (see ASFA Action issues 728 and 791 for further background). 

In response to industry feedback APRA has indicated that it plans to amend the draft revisions to SPS 250 in the following ways: 

The most significant change to SPS 250 is the removal of the requirement for independent certification of priority and privilege insurance arrangements as APRA has determined that mandating such certification may result in unintended consequences. 

APRA is in the process of finalising the amendments to SPS 250 and SPG 250 and intends to issue the final standard and guidance in the coming months. It is APRA’s intention that the revised SPS 250 will be effective from 1 July 2022. 

APRA also intends to require RSE licensees to consider whether any ‘priority and privilege’ provisions in insurance arrangements are affecting the insurance outcomes for members (as reflected in the business performance review and annual outcomes assessment in Prudential Standard SPS 515 Strategic Planning and Member Outcomes. This update will be considered in 2022 as part of the broader suite of changes to SPS 515 Strategic Planning and Member Outcomes and the associated guidance. 

If you have any questions relating to APRA’s letter please contact Senior Policy Adviser, Byron Addison.  

 

Royal Commission implementation: insurance in super exempt from ‘deferred sales model’ 

The Government has made regulations finalising exemptions from the new ‘deferred sales model’ for add-on insurance. Importantly, the regulations confirm that insurance provided within superannuation is exempt from the new model. 

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 a class of add-on insurance products where it would not be appropriate that they be captured by the deferred sales model. The Act also strengthened regulation over hawking of financial products. 

The Government has now made the Australian Securities and Investments Commission Amendment (Deferred Sales Model) Regulations 2021, to specify classes of insurance that will be exempt from the deferred sales model. This includes a ‘superannuation-related add-on insurance product’, which is defined as an add-on insurance product that: 

See ASFA Action issues 814, 813 and 788 for background in relation to the deferred sales model.  

 

Anti-hawking: regulatory guide and legislative instrument 

ASIC has updated Regulatory Guide RG 38The hawking prohibition, following reforms made by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (FSRC Reform Act). Those reforms consolidated the existing hawking provisions into a single prohibition that now applies to all financial products from 5 October. 

ASIC has also registered the ASIC Corporations (Amendment and Repeal) Instrument 2021/799 (the Hawking Amendment Instrument). This amends sixteen existing instruments by updating statutory references to the prohibition on the hawking of financial products. According to the explanatory material, the amendments are minor and technical changes to reflect changes to the hawking provisions made by the FSRC Reform Act, with none of the amendments affecting the policy settings or the duration of any of the above legislative instruments. 

The Hawking Amendment Instrument also repeals two further existing legislative instruments as their purpose or function is now achieved by the revised hawking prohibition imposed by the FSRC Reform Act and amendments made to the Corporations Regulations 2001 by the Financial Sector Reform (Hayne Royal Commission Response) (Hawking of Financial Products) Regulations 2021. 

While ASIC has previously consulted on hawking regulations and updates to its regulatory guidance (see ASFA Actions issues 817, 815 and 735), it did not consult prior to making the Hawking Amendment Instrument. 

 

APRA data reporting standards: Superannuation Data Transformation 

As reported in recent ASFA Actions, APRA has finalised ten data reporting standards under phase 1 of its multi-year Superannuation Data Transformation project and has been publishing frequently asked questions about the new reporting requirements. 

The first submissions of data under several of the new reporting forms are due by 30 September (later dates apply for some forms). 

APRA has now registered determinations to formalise the new reporting standards: 

 

 

ASFA REGULATORY WATCHLIST

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

and other regulatory announcements relevant to superannuation.

Search
Close this search box.
Search
Close this search box.

Logged in as

Most recent