Issue 821, 26 August 2021
In this issue:
- Your Future, Your Super performance test: APRA FAQs
- Closure of SCT: transitional provisions Bill
- Design and distribution obligations: significant dealing notification requirements
- Provision of trust deeds to AFCA: factsheet
- COVID-19 disaster payments and the contribution ‘work test’: APRA FAQ
- APRA Connect go-live
Your Future, Your Super performance test: APRA FAQs
APRA has published a set of frequently asked questions (FAQs) to provide general and technical guidance in relation to the Your Future, Your Super (YFYS) performance test.
As reported in recent editions of ASFA Action, the YFYS reforms were announced as part of the 2020-21 Budget and implemented via the Treasury Laws Amendment (Your Future, Your Super) Act 2021.
The performance test aspect of the reforms applies from 1 July 2021 to MySuper products, and from 1 July 2022 to trustee-directed products. The assessment under the performance test, in conjunction with the ATO’s YourSuper comparison tool, is intended to hold registrable superannuation entity (RSE) licensees to account for underperformance through greater transparency and increased consequences. Where a product fails the performance test in two consecutive years, the RSE licensee will be prohibited from accepting new beneficiaries into that product.
The FAQs address topics including:
- when APRA will notify RSE licensees of their MySuper product’s performance test result, and details around the publication of results on the APRA website
- requirements for RSE licensees to notify beneficiaries of the performance test result for their product
- consideration of the performance test result as part of the RSE’s annual outcomes assessment
- how APRA will approach changes to the structure of a product, and what performance history will be assessed
- how APRA will calculate the administration fees included in the performance test.
In addition, ASFA understands that ASIC yesterday wrote to trustees that APRA has notified are likely to fail or may fail the MySuper performance assessment. The letter highlights obligations imposed on the trustee and confirms that ASIC will undertake reviews to ensure compliance with the YFYS legislative requirements and the intent of the reforms.
Closure of SCT: transitional provisions Bill
The Government has introduced into the House of Representatives a Bill containing transitional provisions addressing the closure of the Superannuation Complaints Tribunal (SCT) and its replacement by the Australian Financial Complaints Authority (AFCA) as the external dispute resolution body for superannuation.
The Treasury Laws Amendment (2021 Measures No. 7) Bill 2021:
- provides for the transfer of records and documents from the SCT to ASIC
- provides for the remittal of matters on appeal by the Federal Court
- introduces a rule-making power to allow the Minister to prescribe other matters of a transitional nature.
The measure partially implements an announcement in the 2019-20 Budget regarding the completion of the SCT’s outstanding casework following the transition to AFCA.
Identical measures were previously introduced into Parliament as part of the Treasury Laws Amendment (2020 Measures No. 4) Bill 2020 (see ASFA Action issue 782). That Bill (which was subsequently redated to 2021) remains before the Senate. It appears that the Government now intends to progress the measures via the new Bill.
The measures will come into effect on the commencement of provisions in the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Act 2018 relating to the closure of the SCT – this will occur on 5 March 2022 unless proclaimed earlier.
Design and distribution obligations: significant dealing notification requirements
As reported in recent ASFA Actions, the design and distribution obligations (DDO) for financial product issuers are due to commence on 5 October.
One aspect of the DDO regime requires an issuer to notify ASIC of a significant dealing (except an excluded dealing) in a financial product that is not consistent with the product’s target market determination (TMD). Distributors of financial products must notify issuers when they identify a significant dealing that is not consistent with the TMD.
ASIC has now published some information on its website explaining how an issuer should notify ASIC of a significant dealing.
Provision of trust deeds to AFCA: factsheet
The Australian Financial Complaints Authority (AFCA) has published a new factsheet outlining its requirements when a trustee is requested to provide copy of a superannuation fund trust deed during external dispute resolution.
The factsheet addresses:
- why AFCA needs to receive an executed trust deed
- what AFCA expects when a new trustee takes over from an outgoing trustee or in a successor fund transfer
- when AFCA might require more than one trust deed
- what AFCA will do if a trustee is unable to provide an acceptable trust deed.
COVID-19 disaster payments and the contribution ‘work test’: APRA FAQ
APRA has published a new frequently asked question (FAQ) in its series about superannuation trustees’ response to the COVID-19 pandemic.
New FAQ 15 deals with how superannuation funds should view the receipt of the COVID-19 Disaster Payment or COVID-19 Pandemic Leave Disaster Payment by an individual aged 67-74 when determining whether the fund is able to accept voluntary contributions from the individual.
The FAQ concludes that such an individual should not be assumed to be gainfully employed for the purpose of the contribution work test. In this respect, RSE licensees’ treatment of the Pandemic Leave Disaster Payment and COVID-19 Disaster Payment will be different to the treatment of the former JobKeeper payment, available during an earlier phase of the pandemic.
APRA Connect go-live
APRA has released further information to assist regulated entities, including superannuation fund trustees, prepare for the launch of its new data reporting solution, APRA Connect, from 13 September.
The material published by APRA includes important information on responsible persons and BEAR information migration and reporting and final taxonomy artefacts.
APRA has noted that all regulated entities now need to prepare for APRA Connect production go-live and nominate their initial Regulatory Reporting Administrator for September 13 go live, in readiness for production.
APRA has scheduled a webinar for Wednesday 1 September to provide entities with an overview of available information and support. The webinar will include a demonstration of APRA Connect. Entities wishing to register for the webinar should do so directly via the APRA website.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
