Issue 812, 6 July 2021
In this issue:
- Your Future, Your Super: Your Super comparison tool
- Oversight of advice fees charged to members’ accounts
- APRA Super Data Transformation: FAQs
- APRA supervisory levy for 2021-22
- Affordable advice: ASIC infographic summary of the industry’s response to CP 332
- Personal transfer balance caps: availability on ATO online
- Regulator Performance Guide
Your Future, Your Super: Your Super comparison tool
The ATO has launched the YourSuper comparison tool, to help consumers compare MySuper products and choose a superannuation fund.
The comparison tool is a key element of the Government’s Your Future, Your Super reforms, which were recently passed by Parliament (see ASFA Action issue 810). The tool:
- displays a table of 80 MySuper products ranked by fees and net returns (updated quarterly)
- allows consumers to select and compare in more detail up to four MySuper products at a time
- links consumers to a super fund’s website when they select a MySuper product from the table
- can show a consumer’s current super accounts alongside other MySuper products (if they access the personalised version through myGov)
- provides links to help consumers consolidate their superannuation accounts.
The information displayed in the comparison tool is collated and supplied by APRA. From September 2021, the tool will show how APRA assessed the annual performance of each super fund. Until then, the reported ‘investment performance’ for all funds will show as ‘not assessed’.
Oversight of advice fees charged to members’ accounts
APRA and ASIC have written to superannuation trustees, outlining the regulators’ expectations for oversight of financial advice fees charged to superannuation members’ accounts.
In 2019, the regulators wrote to trustees regarding their obligations in relation to the charging of advice fees to accounts, asking trustees to review their existing governance and assurance arrangements and address any issues (see ASFA Action issue 706). Subsequently, APRA and ASIC have engaged with trustees to understand the outcomes of their reviews and any actions taken as a result.
The regulators have now outlined non-exhaustive guidance as “a further reference point for trustees in reviewing and improving their oversight framework and practices”. The letter notes that:
- the design of specific oversight practices for fees will depend on the advice service model that superannuation funds offer to members
- generally, APRA and ASIC expect that all trustees:
- have access to the requisite information, systems and suitably qualified people to enable the completion of activities forming part of a robust assurance framework
- incorporate, as necessary, specific control testing reviews within annual audit programs
- produce regular exception reporting on standard processes to ensure any necessary remediation activities can be completed in a timely manner.
- in entering into arrangements with financial services licensees or individual advisers to facilitate the payment of advice fees for members, trustees should have regard to the specific issues for assurance processes set out in the guidance
- trustees with an understanding of the adviser’s business model will be better placed to implement robust and efficient assurance steps
- where the trustee is not providing financial advice itself, its role is to have controls in place in relation to payments made from the fund for advice services. A trustee is not expected to make a detailed evaluation of the specific professional advice provided by the adviser.
The detailed guidance covers the meaning of ‘advice fees’ and specific issues for trustee decision-making, the assurance process and system functionality, including:
- are deductions explicitly authorised by members and consistent with the authorisations and disclosures made?
- have services been provided?
- is the deduction consistent with the sole purpose test?
- is the deduction in the best interests of members?
The guidance concludes by noting that:
APRA and ASIC have identified instances of financial adviser misconduct where failures in trustee oversight have enabled third parties to access superannuation monies to which they were not entitled. Action by ASIC against the financial adviser after the event is no substitute for appropriate risk management practices by trustees.
APRA Super Data Transformation: FAQs
As reported in recent ASFA Actions, APRA recently finalised ten reporting standards under phase 1 of its Superannuation Data Transformation project. APRA has been publishing frequently asked questions (FAQs) for registrable superannuation entity (RSE) licensees ahead of the first submission of data under the standards on 30 September.
APRA has now published additional FAQs on the phase 1 standards, and updated the APRA Connect taxonomy artefacts to include simple, plain English business descriptions for validation rules.
APRA supervisory levy for 2021-22
The Government has determined the supervisory levies to be collected from APRA-regulated entities, including superannuation entities, for 2021-22.
The levies recover the operational costs of APRA as well as other specific costs incurred by certain Commonwealth agencies and departments. These include:
- some costs for ASIC that are not recouped via its own levy
- the ATO’s costs of administering the lost member and unclaimed superannuation money frameworks and the early release of superannuation
- funding for the Gateway Network Governance Body which governs the SuperStream superannuation transaction network.
As relevant to APRA-regulated superannuation entities, the Australian Prudential Regulation Authority Supervisory Levies Determination 2021 imposes the following levy amounts and rates:
| Amount of levy | ||||
| Entity | Maximum restricted levy amount ($) | Minimum restricted levy amount ($) | Restricted levy percentage | Unrestricted levy percentage |
| Pooled superannuation trust | 400,000 | 7,500 | 0.00195 | 0.000970 |
| Small APRA fund or single member approved deposit fund | 590 | 590 | 0.0 | 0.0 |
| Other superannuation entity | 800,000 | 7,500 | 0.00390 | 0.002925 |
Affordable advice: ASIC infographic summary of the industry’s response to CP 332
ASIC has released an infographic summary of the response to Consultation Paper 332: Promoting access to affordable advice for consumers (CP 332) (see ASFA Action issue 784 for background).
The infographic sets out the key issues raised by respondents in their submissions to CP 332, some of which include:
- cost of advice – key contributors include overheads and fixed costs, Statement of Advice preparation, rising regulatory and governance costs
- limited advice – it is too costly to provide, regulatory requirements for comprehensive and limited advice are the same, and lack of clarity about regulatory requirements for limited advice
- ASIC guidance – RG 244 Giving information, general advice and scaled advice and RG 90 Example Statement of Advice: Scaled advice for a new client are too long and need restructuring
- strategic advice – uncertainty about legal requirements and the need for more ASIC guidance
- Digital advice – lack of demand, consumer preference for human advisor and compliance concerns.
Personal transfer balance caps: availability on ATO online
As reported in ASFA Action issue 811, following the indexation of the general transfer balance cap on 1 July 2021, individuals will be able to view their personal transfer balance cap in ATO Online.
The ATO had originally advised that individual personal transfer balances would be available from 5 July. Due to “system issues”, this has now been updated to 15 July.
Regulator Performance Guide
The Government has released a guide setting out the best practice principles that underpin its expectations of regulators.
The new Regulator Performance Guide is part of the Government’s ‘deregulation agenda’, and its broader work to increase accountability, promote best practice, support cultural change and build the professionalism of regulators. The Government has noted the Guide will also streamline performance reporting against its expectations.
The best practice principles set out in the Guide are:
- continuous improvement and building trust
- risk based and data driven
- collaboration and engagement.
The Guide took effect from 1 July with a one-year transition period.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
