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ASFA Action Issue 952, 25 June 2024
In this issue:  

 

APRA prudential handbook: feedback sought

APRA has launched a digital version of its prudential framework, the Prudential Handbook.

The aim of the Handbook is to bring together all of APRA’s policy standards, guidance and supporting information into one place in a digital format that can be easily navigated and searched, and caters to a range of different users across regulated industries and in the broader community.

The Handbook is an outcome of a broader APRA initiative to modernise the prudential architecture. It is structured around pillars that represent one aspect of a regulated entity’s legal responsibilities, including the risks they must manage. There are four pillars that apply to all regulated entities – governance, risk management, recovery and resolution, and reporting. For superannuation, there is a fifth pillar of business operations.

Within each pillar are core standards (foundational requirements), supporting standards (narrower in focus, providing further detail about particular risks or industries) and guidance (prudential practice guides, letters, frequently asked questions and information papers that provide APRA’s view of sound practice in particular areas).

APRA is seeking feedback on the Handbook during early July. If you would like to attend an APRA walk-through of the Handbook (via Microsoft Teams) at 11am on 10 July, or have any feedback you would like ASFA to convey to APRA in relation to the Handbook, please contact Julia Stannard by close of business Thursday 4 July.

 

Virtual and hybrid meetings and electronic document execution: statutory review

Treasury is consulting as part of a statutory review into recent legislative amendments that allowed companies and registered schemes to hold online meetings and electronically execute documents, and transmit meetings-related documents electronically.

The amendments, made by the Corporations Amendment (Meetings and Documents) Act 2022 and Schedule 1 of the Treasury Laws Amendment (2021 Measures No. 1) Act 2021, made permanent relief initially provided during the Covid-19 pandemic. The amendments are not specific to superannuation – and do not apply to a fund’s interactions with its members – but may be relevant to the way superannuation trustee companies discharge their general obligations under the Corporations Act.

Treasury is seeking submissions to the review by close of business Friday 19 July.


Delivering Better Financial Outcomes tranche 1 Bill: Senate Committee report

The Senate Economics Legislation Committee has tabled its report into the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024.

As reported in ASFA Action issue 940, of relevance to superannuation the Bill contains tranche 1 of the Government’s response to the Quality of Advice Review (QoAR), in particular amendments intended to clarify the legal basis of superannuation trustees allowing deduction of advice fees from a member’s superannuation account. These include amendments to section 99FA of the Superannuation Industry (Supervision) Act 1993.

The Committee majority recommended passage of the Bill.

The Coalition Senators provided a dissenting report, recommending the removal of the provisions relating to deduction of advice fees from the Bill, with re-consultation to occur in anticipation of tranche 2 of the Government’s response to the QoAR.

The Bill also contains miscellaneous amendments to Treasury portfolio laws, including and amendment to ensure all members of regulated funds can automatically maintain their insurance following a successor fund transfer. The Senate Committee did not make any specific recommendations in relation to this measure.

 

SPS 530 Investment governance: findings from self-assessment survey

In late 2023, APRA conducted a self-assessment survey to gauge how registrable superannuation entities (RSEs) had implemented enhancements to the prudential standard SPS 530 Investment Governance. APRA has now written to RSE licensees (RSELs) to outline key observations from the survey, calling on RSELs to improve their valuation practices.

APRA requires RSELs to have a robust asset valuation governance framework that addresses risks on a timely basis. Inappropriate asset valuations, especially during periods of heightened market volatility, may materially impact prices applied to member transactions, member equity and reported investment returns. APRA considers active and robust valuation processes, with strong oversight and governance, as critical elements within an RSEL’s investment governance framework.

APRA reports that better practices it observed from the survey, across the majority of RSELs, included:

However, APRA found room for improvement in some key areas including:

The areas for improvement by RSELs varied by size and whether the RSEL operated a platform-style business. The greatest areas for improvement were identified for the cohort comprising small/medium non-platform RSELs and platform RSELs.

APRA’s letter to RSELs sets out additional observations on better practices and areas for improvement and encourages all licensees to consider the findings from the survey with a view to improving their own unlisted asset valuation practices.

 

Updated prudential standards: fit and proper, governance, audit

As reported in ASFA Action issue 950, APRA recently determined updated versions of prudential standards SPS 310 Audit and related matters, SPS 510 Governance, and SPS 520 Fit and Proper.

The updated standards apply from 30 June and follow a consultation on reflecting recent legislative changes to the financial reporting and auditing requirements for superannuation funds into APRA’s prudential framework. APRA has now published a response to the submissions received as part of that consultation.

 

Sustainable Finance Roadmap

The Government has released its Sustainable Finance Roadmap, to help investors, companies and the broader community make the most of the global net zero transformation.

The Roadmap is intended to help mobilise the significant private capital required for Australia to become a renewable energy superpower, modernise Australia’s financial markets and maximise the economic opportunities associated with net zero and sustainability goals. It outlines how Government, regulators and industry will work together to implement sustainable finance initiatives and reforms in a clear and coordinated way.

The Roadmap sets out what is needed to:

The Roadmap identifies additional priorities to fasttrack the growth of our sustainable finance industry, including dealing with greenwashing, better understanding climate risks and opportunities, and improving access to climate and emissions data.

 

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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