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Issue 823, 7 September 2021 
In this issue: 

 

FAR consequential amendments and transitional provisions: consultation 

The Government has released for consultation the draft Financial Accountability Regime (Consequential Amendments and Transitional Provisions) Bill 2021 (Consequential Amendments Bill). 

This follows the release of the draft legislation and explanatory materials to implement the Financial Accountability Regime (FAR) for consultation in July (see ASFA Action issue 814 for background). 

The Consequential Amendments Bill: 

If you have any feedback you would like ASFA to consider in relation to the Consequential Amendments Bill, please forward it to Maggie Kaczmarska by close of business Monday 13 September. 

 

MySuper: review of occupational exclusions in default insurance 

As part of a review announced by the Government in June, Treasury is consulting about the appropriateness of occupational exclusions in default insurance in MySuper products. 

Occupational exclusions can apply for certain occupations that an insurer has classified as higher risk and can mean that default insurance cover is not available, or only partially, to members employed in those occupations. 

The objective of the consultation is to canvass views from interested parties on the extent of the problem arising from occupational exclusions for new members and for members changing jobs and what options, if any, may be required for changes to the current regulatory framework. 

The consultation paper puts forward four options: 

  1. no change 
  2. strengthen disclosure of occupational exclusions 
  3. members retain their insurance coverage when they change occupations 
  4. ban occupational exclusions. 

If you have any feedback you would like ASFA to consider in relation to the occupational exclusion consultation, please forward it to Byron Addison by close of business Thursday 7 October. 

 

New IDR standards: updated regulatory guide & trustee preparedness findings 

ASIC has published an updated version of its new internal dispute resolution (IDR) standards, along with the key findings from a recent survey of trustees’ preparedness for commencement of the new standards. 

As reported in earlier issues of ASFA Action, Regulatory Guide RG 271 Internal Dispute Resolution establishes substantial new IDR requirements for financial firms, including APRA-regulated superannuation funds. The new standards apply to complaints received from 5 October. 

ASIC published an updated version of RG 271 on 2 September, along with a summary of the changes made since the original version published in July 2020. Of particular relevance to superannuation, these changes include: 

An amendment to ASIC Corporations, Credit and Superannuation (Internal Dispute Resolution) Instrument 2020/98 is expected to be registered shortly, to incorporate the new version of RG 271. 

ASIC has reported that its recent survey of trustees’ preparedness for RG 271 found that many trustees were taking significant steps to uplift their handling of consumer complaints in the lead up to the new requirements. However, ASIC identified some important areas requiring additional effort: 

ASIC Commissioner Danielle Press said “We encourage all trustees to assess their preparedness for RG 271 in light of these findings. From 5 October 2021, key parts of the IDR requirements are enforceable. ASIC will take a reasonable approach in the early stages provided trustees are using their best efforts to comply”.  

 

Breach reporting: new ASIC guidance 

ASIC has released new regulatory guidance to help Australian Financial Services (AFS) licensees, including superannuation trustees, meet new breach reporting obligations.  

The new obligations were implemented by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020, as part of the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The reforms commence on 1 October and aim to make breach reporting consistent, clearer and timely across the industry.  

ASIC has now published a revised version of Regulatory Guide RG 78Breach reporting by AFS licensees and credit licensees, as well as an information sheet INFO 259. The latter sets out actions that must be taken by licensees to notify affected customers of a breach of the law, investigate the breach and remediate impacted customers. ASIC has also published REP 698 which outlines its response to submissions on its consultation paper CP 340 in relation to the reforms. 

ASIC recently indicated it will take a “reasonable approach” in the initial stages of these new obligations provided industry participants are using their best efforts to comply. See ASFA Action issues 788 and 817 for background on the reforms. 

 

Improving the visibility of super assets in family law proceedings 

A Bill containing reforms to facilitate the identification of superannuation assets by parties to family law proceedings has completed its passage through Parliament without amendment and now awaits Royal Assent. 

The reforms — contained in the Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 — are intended to implement a commitment made by the Government in late 2018 as part of the Women’s Economic Security Statement. See ASFA Action issues 822 and 819 for background in relation to the Bill. 

 

Recontribution of COVID-19 early release amounts 

The ATO has issued some further guidance for superannuation funds following recent legislative changes allowing individuals who withdrew amounts under the COVID-19 early release initiative to recontribute them into superannuation. 

The Treasury Laws Amendment (More Flexible Superannuation) Act 2021, which received Royal Assent in June, allows individuals who received a COVID-19 early release of superannuation amount to re-contribute up to that amount back into super without it counting towards their non-concessional contributions cap. Recontributions under this measure can be made between 1 July 2021 and 30 June 2030. 

In order to qualify for the exemption from the non-concessional contributions cap, a member utilising this measure must complete an approved form and provide it to their fund before or at the time of making the re-contribution. Individuals can use the approved form issued by the ATO, or one prepared by their fund. 

The guidance released by the ATO includes frequently asked questions addressing issues in relation to administration of the recontribution amounts. 

See ASFA Action issues 820, 819, 811, 810 and 809 for background on the recontribution measure. 

 

Streamlining requirements for actuarial certificates: funds fully in retirement phase 

A Bill containing measures to remove a requirement for some superannuation funds to obtain actuarial certificates when calculating their ‘exempt current pension income’ (ECPI) has been passed by Parliament without amendment and now awaits Royal Assent. 

The amendments, contained in the Treasury Laws Amendment (2021 Measures No. 6) Bill 2021, will effectively remove the requirement for superannuation trustees to obtain an actuarial certificate when calculating ECPI where all members of the fund are fully in retirement phase for all of the income year. The measure partially implements a commitment from the April 2019 Budget. See ASFA Action issues 822 and 819 for background in relation to the Bill. 

The ECPI rules provide a fund with a tax exemption on the income derived from assets that support payment of the fund’s current pension liabilities. ECPI may be calculated using either a proportional method (supported by an actuarial certificate) or via the segregation of assets. 

 

 

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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