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Issue 688, 4 October 2018 
In this issue: 

 

Royal Commission: interim report 

The Royal Commission into misconduct in the banking, superannuation and financial services industry has now delivered its interim report. 

ASFA intends to make a submission responding to some of the questions with respect to regulation and the regulators. These include: 

If you have any feedback you would like ASFA to consider in relation to the issues raised in the interim report, please forward it to Fiona Galbraith by close of business Monday, 15 October. 

 

 

Work test exemption for recent retirees: consultation 

The Government is consulting on amendments to the superannuation regulations and tax legislation to provide a one-year exemption from the contributions work test for eligible recent retirees. The proposal was announced in the May 2018 Budget (see ASFA Action issue 669). 

Under the proposal, retirees aged 65-74 with a total superannuation balance under $300,000 would be exempt from the contributions work test for 12 months from the end of the financial year in which they last met the work test. 

It is intended that the exemption will apply to voluntary contributions made in the 2019-20 and later financial years. 

The consultation package includes amendments to the contributions work test rules in the Superannuation Industry (Supervision) Regulations 1994 and to the non-concessional contributions cap rules in the Income Tax Assessment Act 1997. 

If you have any feedback that you would like ASFA to consider including in a response to Treasury, please forward it to Julia Stannard by close of business Friday, 19 October. 

 

 

Family law and superannuation: Law Reform Commission discussion paper 

The Australian Law Reform Commission has released a discussion paper on proposed reforms to the Family Law Act 1975, as part of a review established in September 2017. 

Discussion Paper 86, Review of the Family Law System puts forward a number of proposals and questions that relate specifically to the splitting of superannuation under the Family Law Act. These include: 

Proposal 3–15 – the Government should develop information resources for separating couples to assist them to understand superannuation, and how and why superannuation splitting might occur. 

Proposal 3–16 – the Family Law Act should require superannuation trustees to develop standard superannuation splitting orders on common scenarios. Procedural fairness should be deemed to be satisfied where parties develop orders based on these standard templates. The templates should be published on a central register. 

Proposal 3–17 – the Government should develop tools to assist parties to create superannuation splitting orders. These could include: 

Question 3–2 – should provision be made for early release of superannuation to assist a party experiencing hardship as a result of separation? If so, what limitations should be placed on the ability to access superannuation in this way? How should this relate to superannuation splitting provisions? 

Proposal 5–6 – the Family Law Act should set out the duties of parties involved in family dispute resolution or court proceedings for property and financial matters to provide early, full and continuing disclosure of all information relevant to the case. For parties involved in family dispute resolution or court proceedings, disclosure duties should apply to superannuation interests (among other things). 

If you have any feedback you would like ASFA to consider in relation to the discussion paper, please forward it to Fiona Galbraith by close of business Friday, 2 November. 

 

 

ASFA Thomson Geer Regulatory Update (April – September 2018) 

Delivered in partnership with Thomson Geer, the latest edition of the ASFA Thomson Geer Regulatory Update has been released and is now available for members to download from the Regulatory Update section of the ASFA website. 

This free ASFA member service seeks to keep you up to date with the changing superannuation environment, and provides essential information for those wanting to stay abreast of the challenges and issues facing superannuation funds. This edition of the Update focuses on legislation and pertinent case law developments for the period April – September 2018. 

The information will be of particular use to: 

Members wishing to discuss the Update can contact Julia Stannard. 

 

 

AFCA: notifying ASIC of change of EDR details 

As outlined in ASFA Action issue 686, ASIC recently extended the period for Australian Financial Services (AFS) licensees to notify ASIC of the change of their external dispute resolution (EDR) details in relation to the commencement of the Australian Financial Complaints Authority (AFCA). ASFA has now received confirmation that an update to ASIC’s approved form will be made shortly to facilitate this notification. 

The conditions imposed on an AFS licensee require it to notify ASIC of certain changes, including a change in its EDR arrangements. Superannuation trustees that are AFS licensees will accordingly need to notify ASIC that their EDR arrangements will change from the Superannuation Complaints Tribunal, and the Financial Ombudsman Service if applicable, to AFCA. 

ASIC recently registered the ASIC Corporations and Credit (Transition to AFCA) Instrument 2018/814, which extends the statutory period for an AFSL holder to notify ASIC about a change in their EDR arrangements. The instrument effectively requires licensees to make this notification to ASIC in the period between 1 November and 30 November 2018. 

The appropriate format for this notification is ASIC’s form FS20 Change of details for an Australian financial services licence. That form has not yet been updated to reflect the establishment of AFCA. 

ASIC has advised ASFA that the form will be updated by 1 November, in time for AFS licensees to make their notification by 30 November. 

 

 

Extension of SuperStream to SMSFs 

The Government has finalised regulations extending SuperStream to self-managed superannuation funds (SMSFs). 

The Treasury Laws Amendment (2018 Measures No. 2)amend the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) to extend the operation of SuperStream to cover SMSFs and make some minor and technical changes to improve the operation of the SIS Regulations. 

The Regulations extend the operation of Part 3B of the SIS Regulations, regarding superannuation data and payment matters, to cover SMSFs, with effect from 30 November 2019. Trustees of SMSFs are not required to provide information to the Commissioner of Taxation, under Part 3B, before 30 November 2019. 

The Regulations also contain amendments to bring SMSFs within Division 6.5 of Part 6 of the SIS Regulations. Broadly, Division 6.5 prescribes which superannuation transactions are subject to the superannuation electronic data and payment regulations and standards (SuperStream). It prescribes the information that is required to accompany a request for a rollover or transfer, a member registration and a contribution, and when that information must be validated. Prior to these amendments, Division 6.5 had very limited application to SMSFs. These amendments commenced on 29 September but apply to transfers and rollovers that are requested on or after 30 November 2019. 

Finally, the Regulations sets out transitional rules to ensure the Regulations apply appropriately for relevant contributions, rollovers, and transfers that happen on 30 November 2019 or within the ten business days that follow. 

The Regulations were the subject of consultation during July 2018 (see ASFA Action issue 680). 

 

 

Cloud computing: updated APRA information paper 

APRA has released an updated information paper for its regulated entities on the use of shared computing services. Outsourcing involving cloud computing servicesprovides an update on a 2015 paper Outsourcing involving shared computing services (including cloud). This outlined prudential considerations and key principles that should be considered when adopting use of cloud computing services. 

The updated paper is a response to APRA’s observation of the growing use of cloud computing services by regulated entities, an increasing appetite for higher inherent risk activities, and areas of weakness identified as part of supervisory activities. 

APRA has also noted that there has, since 2015, been continuous evolution of both cloud computing service offerings and regulated entities’ risk management. APRA recognises that the risks associated with the use of cloud computing services will depend on the nature of the usage. It has classified these risks into three broad categories: 

The paper indicates that APRA expects all risks to be managed appropriately commensurate with their inherent risk. However, for extreme inherent risk, APRA expects an entity will be able to demonstrate to APRA’s satisfaction, prior to entering into the arrangement, that the entity understands the risks associated with the arrangement, and that its risk management and risk mitigation techniques are sufficiently strong. 

APRA’s newsletter Insight Issue 3 2018 contains a feature article on the updated information paper. 

 

 

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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