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Issue 617, 4 January 2017 

In this issue: 

 

Fees and cost disclosure: ASIC notification and extension for PDSs 

ASIC has released details of the process that superannuation trustees and responsible entities of managed investment schemes (issuers) must follow in order to take advantage of a recently announced extension until 30 September 2017 of fee and cost disclosure requirements for product disclosure statements (PDSs). 

In late November, ASIC announced a conditional extension of the revised fee and cost disclosure requirements for issuers’ PDSs (see ASFA Action issue 613). Issuers who have not opted in to compliance with the current version of the Class Order governing fee and cost disclosure [CO 14/1252] by 1 February 2017 may take advantage of this transitional relief if they: 

ASIC has now published on its website the form and instructions that issuers must use to provide ASIC with the necessary data on fees and costs. 

ASIC has also now made ASIC Corporations (Amendment) Instrument 2016/1224, amending [CO 14/1252] to give effect to the extension and the notification requirements. The Instrument gives effect to the extension and the notification requirements and clarifies the disclosure requirements, particularly in relation to borrowing costs. ASIC has also indicated that it will make corresponding amendments to Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97). 

 

Budget superannuation reforms: further consultation and guidance 

On 16 December, the government released a further tranche of draft regulations to support the superannuation reform package that was announced in the May 2016 Budget and passed by Parliament during November (see ASFA Action issue 613). 

The draft regulations relate to: 

If you have any feedback you would like ASFA to consider including in our submission, please forward it to Fiona Galbraith by close of business Friday 3 February. 

The government has indicated that further draft regulations to support innovative income stream products and valuation rules for the transfer balance cap will be released for public consultation in early 2017, prior to the commencement of the measures contained in the reform package. 

On 14 December, the ATO published the latest in the series of draft ‘Law Companion Guidelines’ developed to provide guidance on the operation of the superannuation reforms (see ASFA Action issue 614 for other drafts in the series). Draft Law Companion Guideline LCG 2016/D11 Superannuation reform: concessional contributions – defined benefit interests and constitutionally protected funds clarifies how the amendments to the calculation of concessional contributions and excess concessional contributions apply to contributions and amounts allocated by superannuation providers for the financial years commencing on or after 1 July 2017. 

 

Objective of the super system: consultation 

The government has released for consultation exposure draft of regulations outlining its proposed ‘subsidiary objectives’ of the superannuation system. 

The draft regulations follow on from the recent introduction of the Superannuation (Objective) Bill 2016 (the Objective Bill) into Parliament (see ASFA Action issue 612). The subsidiary objectives of the superannuation system were previously consulted on publicly in September 2016 as part of the explanatory material to the Objective Bill (see ASFA Action issue 608). 

The Regulation prescribes the following subsidiary objectives: 

The Regulation is intended to apply immediately after the Objective Bill commences, on the first day of the first quarter following Royal Assent. 

If you have any feedback you would like ASFA to consider including in our submission, please forward it to Julian Cabarrus by close of business Friday 3 February. 

 

MyRetirement products: consultation 

On 15 December 2016, Treasury released a discussion paper Development of the framework for comprehensive income products for retirement, exploring policy issues to facilitate further development of a framework for the retirement phase of the superannuation system. 

The discussion paper is part of the government’s response to the Financial System Inquiry, and addresses what the Inquiry labelled ‘comprehensive income products for retirement’ or ‘CIPRs’. As part of its consultation, the government is proposing to rename CIPRs ‘MyRetirement products’ as a more consumer-friendly and meaningful name. 

Submissions in response to the discussion paper are due by 28 April 2017. 

If you have any feedback you would like ASFA to consider including in our response, please forward it to Fiona Galbraith by close of business Tuesday 28 February. 

 

Review of financial services complaints schemes: reminder to provide feedback on interim report 

As outlined in ASFA Action issue 614, the expert panel conducting a review of the financial systems’ external dispute resolution (EDR) framework released its interim report on 6 December 2016 (refer ASFA Action issues 608, 602 and 601 for background). 

The report recommends a number of significant changes to the current EDR arrangements for superannuation, including transitioning the current Superannuation Complaints Tribunal to a new, industry-funded superannuation ombudsman with a view to ultimately integrating it into a single ombudsman scheme covering all financial services complaints. 

If you have any feedback you would like ASFA to consider including in its submission to the Panel, please forward it to Julia Stannard by close of business Wednesday 11 January. 

 

Section 29QC consistency requirements: extension 

ASIC has extended the date for compliance with the ‘comparability’ requirements in section 29QC of the Superannuation Industry (Supervision) Act 1993 until 1 January 2019. 

To promote systemic transparency, subsection 29QC(1) requires a Registrable Superannuation Entity (RSE) licensee to ensure that, where it is required to give information to APRA under a reporting standard that requires the information to be calculated in a particular way, and where the same or equivalent information is given to other persons, the information given to the other person is calculated in the same way as the information given to APRA. 

While subsection 29QC(1) commenced on 1 July 2013, ASIC subsequently issued a number of extensions to ensure that the requirements appropriately aligned with APRA’s reporting standards, the proposed choice product dashboard rules and the expanded fee and cost disclosure rules. (See ASFA Action issues 541, 555, 568, 569, 570, 585 and 587 for background on this matter.) 

Following the last such extension, the section 29QC requirements were due to apply from 1 February 2017. ASIC has now made ASIC Superannuation (Amendment) Instrument 2016/1232, further extending the start date for the section 29QC until 1 January 2019. 

According to the explanatory material, “ASIC considers that a further delay until 1 January 2019 will provide time for the Choice product dashboard requirements to be settled, which may be beneficial in settling the policy position for the application of s29QC”. 

 

ATO outage: APRA letter re impact on RSE licensees 

Following on from the recent outage of the Australian Taxation Office’s (ATO) information technology systems (refer ASFA Action issue 615), APRA has written to all RSE licensees to indicate its approach to breach reporting requirements. 

In particular, the APRA letter notes that during the outage and the subsequent restoration period, it may have been impossible for RSE licensees to meet certain regulatory time limits, including the requirement to process rollovers within three days under regulation 6.34A of the Superannuation Industry (Supervision) Regulations 1994. 

While noting the importance of this requirement, APRA noted that its approach to its enforcement recognises there may be occasions where, for reasons outside the control of the trustee, 100 per cent compliance may not be possible. 

APRA has confirmed that it considers that breaches of regulation 6.34A were inevitable during this period and it will take no action in relation to breaches directly related to the ATO IT outage. APRA also advised RSE licensees that it is unnecessary to provide APRA with formal notification of breaches which are a direct result of this ATO IT outage. 

 

Liquidity stress testing: findings from APRA review 

The latest edition of APRA’s Insight publication outlines the findings of its 2015 review of the superannuation industry’s approach to conducting stress tests on liquidity. 

The review examined how superannuation trustees were performing liquidity stress tests, as well as how they were using the results. APRA’s key observations include: 

 

Design and distribution obligations and product intervention power: consultation 

The government has commenced consultation on design and distribution obligations and product intervention powers in financial services. 

As part of its response to the Financial System Inquiry (FSI) Improving Australia’s Financial System 2015, the government accepted the FSI’s recommendations to introduce: 

The government has now released a proposals paper seeking feedback on the implementation of these measures. 

Submissions are due to Treasury by 15 March 2017. 

 

Review of tax and corporate whistleblower protections 

The government has commenced a consultation on protections for tax whistleblowers. 

On 20 December, the government released a discussion paper seeking views on the introduction of appropriate protections for tax whistleblowers and in assessing the adequacy of existing whistleblower protections in the corporate sector. 

The paper follows on from an announcement in the May 2016 Budget that the government would introduce new arrangements to better protect tax whistleblowers as part of its commitment to tackling tax misconduct. The paper is also part of the government’s commitment to ensuring appropriate protections are in place for people who report corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector. 

According to the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, the paper also complements a recently announced parliamentary inquiry into the development and implementation of whistleblower protections in the corporate, public and not-for-profit sectors, taking into account the Fair Work (Registered Organisations) Amendment Act 2016 passed by Parliament in November 2016. 

Submissions close on 10 February 2017. 

 

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