Issue 762, 30 June 2020
In this issue:
- MySuper heatmaps updated
- COVID-19 Coronavirus: early release of super – APRA data
- Internal dispute resolution: transitional extension of existing standards
- Successor fund transfers: ATO reporting protocol updated
MySuper heatmaps updated
This morning APRA published its first update to the MySuper product heatmap, to reflect changes in superannuation fees and costs since the heatmap was launched in December.
APRA’s analysis of the latest data, summarised in a new Insights Paper, shows products with 6.1 million MySuper members (42 per cent) have lower total fees, resulting in estimated aggregate savings for members of $110 million a year. However, APRA also found that fund administration fees have largely remained static or risen slightly, while the majority of funds that underperformed on fees and costs in the December 2019 Heatmap continue to have relatively high fees.
APRA Deputy Chair Helen Rowell said the updated data is a promising start, but both APRA and fund trustees must do more to optimise member outcomes. Mrs Rowell said APRA would continue to take a more intensive supervision approach with the trustees of underperforming funds. “APRA is writing to the trustees of more than a dozen MySuper products that continue to seriously underperform on fees. The letter will put these trustees squarely on notice that APRA is seriously considering its response to their failure to swiftly address these issues. Any response may include formal enforcement action,” she said.
APRA has not yet updated the sections of the heatmap focused on investment performance and sustainability because material changes in those areas are expected to take longer to manifest.
APRA acknowledges that recent financial market volatility will impact investment performance and lead to changes in the outcomes for MySuper members. APRA will consider this when it publishes a complete refresh of the heatmap later this year. APRA also continues to advance plans to expand the heatmap to cover insurance, and also choice products.
For background in relation to the heatmap, see ASFA Action issues 742, 730 and 727.
COVID-19 Coronavirus: early release of super – APRA data
APRA has made its ninth weekly publication of industry-level data from its early release initiative data collection.
The data shows that from inception of the early release initiative (20 April) to 21 June:
- payments totalling $17.1 billion had been made, with an average payment of $7,492
- 2.4 million applications had been received, with 2.3 million applications paid
- funds were taking an average of 3.3 business days to pay an application, with 95 per cent of applications paid within five business days.
APRA has also published the eighth tranche of fund-level statistics from its early release data collection, revealing the number and value of the payments processed by each fund, as well as the time taken to make payments.
Internal dispute resolution: transitional extension of existing standards
As reported over the last year, ASIC has been preparing to issue substantially revised standards for internal dispute resolution (IDR) for financial firms, including superannuation trustees.
Last October, ASIC registered the ASIC Corporations and Credit (Internal Dispute Resolution—Transitional) Instrument 2019/965. That instrument had the effect of ensuring that the existing IDR standards— contained in Regulatory Guide RG 165 Licensing: Internal and external dispute resolution and section 101 of the Superannuation Industry (Supervision) Act 1993—would continue in effect until 30 June 2020, by which date it was expected ASIC’s new standards would have been released.
In April this year ASIC indicated that the release of its new IDR standards would be deferred, given the impact of the COVID-19 pandemic. On 11 June ASIC announced that the new IDR standards would be released in July, as Regulatory Guide RG 271 Internal Dispute Resolution, for commencement on 5 October 2021 (see ASFA Action issues 749 and 759).
Given the confirmed date for commencement of the new IDR standards, ASIC has now registered the ASIC Corporations, Superannuation and Credit (Amendment) Instrument 2020/99 to further extend the transitional application of RG 165 until 5 October 2021.
Successor fund transfers: ATO reporting protocol updated
The ATO has updated guidance on the reporting requirements in relation to a successor fund transfer (SFT).
The Successor Fund Transfer reporting protocol has been updated to provide more detailed guidance for funds undertaking a SFT. These updates include:
- adding the definition of a lost member and making it clear that a member’s ‘lost’ status moves from the transferring fund to the receiving fund
- definitions for all unclaimed superannuation money (USM) categories including legislative references, to assist funds in assessing accounts for USM reporting during an SFT
- guidance on how to confirm the requirements for tax relief for merging APRA superannuation funds have been met.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
