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Issue 692, 28 November 2018 
In this issue: 

 

Change of EDR arrangements: ASIC notification due by 30 November 

ASIC has asked ASFA to remind trustees that hold an Australian Financial Services Licence (AFSL) that they must make a formal notification, by 30 November, about the recent change in their external dispute resolution (EDR) arrangements. 

Trustees that are AFSL holders are required to notify ASIC that their EDR arrangements have changed from the Superannuation Complaints Tribunal (SCT) (complaints lodged from 1 November only) and (where relevant) the Financial Ombudsman Service (FOS) to the Australian Financial Complaints Authority (AFCA). (See ASFA Action issues 690, 688 and 686 for background.) 

ASIC has indicated that a number of superannuation trustees are yet to make the necessary notification, and has requested that we pass on the following message: 

 

Notice of AFCA scheme membership 

Earlier this year, ASIC issued ASIC Corporations and Credit (Transition to AFCA) Instrument 2018/814, which provided transitional relief from the requirement for financial service and credit licensees, corporate authorised representatives and unlicensed carried over instrument lenders to notify ASIC of their AFCA membership details (the relief). 

The relief extended the statutory notification period from 10 or 15 days to 30 days (1 November to 30 November 2018). 

This means that AFCA members that are currently subject to the relief, must notify ASIC of their AFCA membership details before 30 November 2018. This includes superannuation trustees that are current members of AFCA and hold a financial services licence. 

 

Important information – completing the notification 

Superannuation trustees are able to update their details on the ASIC AFS licensee portal. 

Late fees will not apply if AFCA details are updated by 30 November 2018. If superannuation trustees update their AFCA membership details after this date, late fees will apply. 

 

 

Early release of superannuation: consultation 

The Government has launched a second round of consultation on reform of the rules governing the early release of superannuation benefits on compassionate and severe financial hardship grounds. 

Treasury has released an issues paper outlining its findings from consultations undertaken from December 2017 to February 2018 (see ASFA Action issue 656). The paper seeks views on: 

Treasury is seeking comments by 15 February. If you have any feedback you would like ASFA to consider including in a response to Treasury, please forward it to Fiona Galbraith by close of business Friday, 1 February. 

 

 

Economies of scale in superannuation: Productivity Commission supplementary paper 

The Productivity Commission has released a third supplementary paper as part of its assessment of the efficiency and competitiveness of the superannuation system. The paper considers whether economies of scale are realised in the superannuation system, and whether the benefits are passed through to fund members. 

The paper follows on from the Commission’s May 2018 draft report (see ASFA Action issue 673) and the release of supplementary papers on insurance in superannuation and investment performance in October (see ASFA Action issue 689). 

The Commission is due to deliver its final report to the Government by the end of the year. 

 

 

Superannuation assets in family law proceedings: improving visibility 

The Government has announced a new information-sharing initiative to ensure that family courts have greater visibility over parties’ superannuation assets when making property orders. 

The ATO will receive $3.3 million in funding to develop an information-sharing system, to make it easier for family law courts to identify lost, undisclosed superannuation assets. The announcement follows on from the Government’s recent Women’s Economic Security Package (see ASFA Action issue 691). 

The Attorney-General, Christian Porter MP, said “Getting full visibility of superannuation assets in family law matters can be complex, timeconsuming and costly, often requiring parties to go on ‘fishing expeditions’ using subpoenas and other formal court processes, with no guarantee of success. This new system will ensure faster and fairer resolutions of family law property disputes.” 

The Assistant Treasurer, Stuart Robert MP, noted that “Superannuation is often the most significant asset in a separated couple’s property pool, particularly for low-income households with few assets”. 

The Minister for Women, Kelly O’Dwyer MP, said “The non-disclosure of superannuation assets can often disproportionately disadvantage women due to a significant disparity in superannuation savings between men and women. A lack of financial disclosure by a former partner can result in women receiving a smaller share of property than they would otherwise be entitled to.” 

Ms O’Dwyer noted that giving the courts access to superannuation information held by the ATO is expected to result in faster property settlements. Further, as it will provide the family law courts with a more accurate and reliable source of superannuation information to inform a property settlement, it will result in more just and equitable outcomes. 

 

 

Means testing of pooled lifetime retirement income streams 

The Government has indicated that it intends to introduce amendments to the social services legislation to amend the means testing rules for pooled lifetime retirement income streams, as announced in the May 2018 Budget (see ASFA Action issue 669). 

In the May 2018 Budget, the Government announced that the new means test rules will assess a fixed 60 per cent of all pooled lifetime product payments as income. 60 per cent of the purchase price of the product will be assessed as assets until the age of 84 years, or a minimum of 5 years, and then 30 per cent for the rest of the person’s life. The new rules will apply to from 1 July 2019, with grandfathering for pooled lifetime income streams purchased before 1 July 2019. 

The Minister for Families and Social Services, Paul Fletcher MP, announced that the Government will shortly introduce into Parliament the Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018 to implement the new means test rules. 

Mr Fletcher said the new rules will “make sure that these products are fairly and consistently assessed” and will “encourage the development of new types of financial products in the superannuation system, improving choice and flexibility for retirees”. 

The Bill will also reportedly increase and extend the Pension Work Bonus and expand the Pension Loans Scheme, to implement announcements made in the May 2018 Budget. 

 

 

ASIC cost recovery levies 

ASIC has made legislative instruments setting the amount of its regulatory costs to be recovered from regulated entities—including superannuation trustees—under the cost recovery levy for the 2017-18 financial year. 

ASIC’s cost recovery levy was introduced as part of a new industry funding model that commenced from 1 July 2017 (see ASFA Action issues 665, 637, 634 and 628 for background). The industry funding model involves industry levies imposed on the regulated entities on an annual basis, to recover ASIC’s regulatory costs for the previous financial year, and fees for service imposed to recover ASIC’s costs for specific regulatory activities requested by an entity. 

ASIC has now issued theASIC (Supervisory Cost Recovery Levy—Regulatory Costs) Instrument 2018/1062 and the ASIC (Supervisory Cost Recovery Levy—Annual Determination) Instrument 2018/1063. These instruments specify: 

Together, these instruments provide ASIC with the necessary information to enable it to calculate the levies payable by each leviable entity for the 2017-18 financial year. ASIC will issue invoices to leviable entities in January 2019. 

 

 

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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