Issue 808, 8 June 2021
In this issue:
- Your Future, Your Super Bill passed by House of Representatives
- APRA data collection: APRA Connect
- Ceasing use of LIBOR in new contracts
Your Future, Your Super Bill passed by House of Representatives
The Bill to implement the Government’s Your Future, Your Super reforms has been passed by the House of Representatives with one substantial amendment.
As reported in ASFA Action issue 793, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 will implement the Your Future, Your Super reforms announced in the October 2020 Federal Budget (see ASFA Actions 778 and 785 for further background). Those reforms contain:
- a requirement that where a new employee is ‘stapled’ to an existing superannuation fund and does not choose a fund to receive contributions, their employer is required to make contributions on behalf of the employee into the ‘stapled’ superannuation fund
- measures to address underperformance in superannuation, by requiring APRA to conduct an annual performance test for MySuper products and other products to be specified in regulations
- a ‘best financial interests duty’ requiring superannuation trustees to act in the best financial interests of their members when they undertake the many actions involved in operating a superannuation entity.
During debate on the Bill, the House of Representatives accepted a Government amendment to remove one aspect of the best financial interests duty that would have prohibited the trustee of a registrable superannuation entity making a payment or investment of a kind prescribed by regulations.
Several other amendments moved by the Opposition and by the crossbench were rejected, including:
- a proposed deferral of the 1 July 2021 commencement date for the reforms
- extensive changes to the ‘stapling’ requirements
- broader revision of the best financial interests duty.
The Bill now awaits consideration by the Senate, which will next sit from 15-17 June.
APRA data collection: APRA Connect
APRA has published further information to assist regulated entities, including superannuation trustees, prepare for the new APRA Connect data reporting environment, which is scheduled to go live on 13 September.
In particular, APRA’s update notes that:
- the APRA Connect test environment will be available from 17 June for users to become familiar with APRA Connect and to lodge trial submissions of data. Access will be given to regulatory technology businesses on an ongoing basis, on request
- a guidance document is now available to help users access, navigate and use APRA Connect; this should be used in conjunction with taxonomy artefacts when preparing and submitting data to APRA
- a webinar will be held on 10 June to provide an overview of available information and support and a demonstration of APRA Connect.
Ceasing use of LIBOR in new contracts
APRA, ASIC and the Reserve Bank of Australia have emphasised the need for entities to cease using benchmarks tied to the London Interbank Offered Rate (LIBOR) in new contracts before the end of 2021.
On 2 June, the Financial Stability Board (FSB) announced that all new use of LIBOR benchmarks should cease as soon as practicable and no later than the timelines set out by home authorities and/or national working groups in the relevant currencies. The FSB also released guidance materials and statements encouraging the adoption of overnight risk-free rates where appropriate, and supporting the use of the International Swaps and Derivatives Association (ISDA) spread adjustments in cash products.
ASIC, APRA and the Reserve Bank have indicated they support the guidance and expectations set by the FSB. In their view, continued reliance on LIBOR poses significant risks and disruptions to the stability and integrity of the financial system. Firms themselves may also face financial, conduct, litigation, and operational risks associated with inadequate preparation.
ASIC, APRA, and the RBA expect all market participants to adhere to the deadline at the end of 2021 for the issuance of new LIBOR contracts. They should also accelerate the active conversion of legacy LIBOR contracts.
ASIC has previously issued an information sheet providing guidance that Australian entities can adopt to manage conduct risk during the London Interbank Offered Rate (LIBOR) transition — see ASFA Action issue 786 for background.
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ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
