Issue 609, 26 September 2016
In this issue:
- Fees and costs
- Productivity Commission superannuation inquiry: alternative default models
- ATO reminds small business about SuperStream
- Client review and remediation: ASIC guidance
Fees and costs
ASIC has published three Frequently Asked Questions on the ASIC website in relation to fees and costs disclosure.
They are with respect to:
- ASIC taking a facilitative approach to compliance after the end of transition period with respect to Product Disclosure Statements (PDSs)
- whether PDS issuers need to give members a Significant Event Notice with respect to any changes to PDS disclosed fees and costs as a result of complying with the new fee and cost disclosure requirements
whether a vehicle would or would not be regarded as an interposed vehicle on the basis that it is listed or isn’t unlisted.
Productivity Commission superannuation inquiry: alternative default models
ASFA is drafting a submission in response to the Productivity Commission’s issues paper, Superannuation: Alternative Default Models.
The Productivity Commission has broadly outlined alternative options for allocation of default superannuation funds. They are:
- Administrative model: This would use a ‘filter’ to determine which products are eligible to be used as defaults – minimum standard rather than ranking of products. MySuper authorisation a minimum, but currently legislated criteria for award defaults possible add on. Question of how frequent reviews would be, who would do them and what the criteria might be. Allocation to products could be by a government body or on a decentralised basis by employers from a list of eligible products.
- Market-based models: This would use a tender process for eligible products canvassed in the paper, like in Chile or New Zealand. Challenge of multiple metrics in a tender process. Single tender or separate tender for different segments of employees canvassed. Multiple successful tenderers could be allocated to a proportion (determined in some way) of employees.
- Active choice by employees: This is like choosing a bank account to receive a wage or nudging members to high performing funds (although it is not clear how these would be identified).
A working group has been established which is representative of ASFA’s membership to discuss and clear the submission. If you would like to provide any comments on the Productivity Commission’s paper for consideration by the working group please email James Bond. Please provide comments by Friday 30 September.
ATO reminds small businesses about SuperStream
As the extended SuperStream compliance deadline of 28 October 2016 for small businesses (those with less than 20 employees) approaches, the ATO has issued a press release “reminding small businesses that super needs to be paid in a new way”. Businesses that continue to make employee superannuation contributions by cheque or electronically by direct transfer or BPAY need to adjust to a standard electronic format.
The ATO has indicated that they have given small businesses extra time to prepare for SuperStream by providing one more quarterly payment date until the deadline. Deputy Commissioner James O’Halloran wants to make sure that all small businesses are aware that SuperStream compliance is mandatory.
According to the ATO, more than 470,000 small businesses are now paying their contributions electronically via SuperStream and as a result, in excess of 10.5 million employees are already receiving superannuation payments quicker and more efficiently.
The one off set up commitment is acknowledged by the ATO however “once established it is easy and ready to use for each contribution cycle”.
The ATO has prescribed various options for small businesses to start paying the SuperStream way:
- a payroll system that meets the SuperStream standard
- a super fund’s online system
- a super clearing house, including the ATO’s free Small Business Superannuation Clearing House
- a messaging portal
- obtaining help from an accountant or bookkeeper.
Client review and remediation: ASIC guidance
ASIC has finalised new guidance on client review and remediation. The new guidance, Regulatory Guide 256: Client review and remediation conducted by advice licensees sets out guidance for Australian Financial Services (AFS) licensees who provide personal advice to retail clients (advice licensees).
Review and remediation generally aims to place affected clients in the position they would have been in if the misconduct or other compliance failure had not occurred.
The guidance should also be applied to review and remediation that is not related to personal advice to the extent relevant, including for superannuation fund trustees: misconduct or other compliance failure by advice licensees relating to general advice.
Announcing the release of RG 256, ASIC’s Deputy Chairman Peter Kell noted that “ASIC wants to ensure that advice licensees proactively address any systemic problems caused by their conduct and, where necessary, put processes in place to remediate their clients for loss suffered in a way that is timely, fair and transparent”.
ASIC will shortly release an amendment to Class Order [CO 14/923] record-keeping obligations for AFS licensees when giving personal advice.
