Issue 854, 8 June 2022
In this issue:
Proposed financial institutions supervisory levies: consultation
Treasury has issued a discussion paper seeking submissions on the proposed financial institutions supervisory levies that will apply for the 2022-23 financial year.
The financial institutions supervisory levies are set to recover the operational costs of APRA and other specific costs incurred by certain Commonwealth agencies and departments, including the ATO.
If you have any feedback on issues you would like ASFA to consider in relation to the proposed levies, please forward it to Andrew Craston by close of business, Thursday 9 June.
Draft ASIC cost recovery implementation statement 2021-22: consultation
ASIC is consulting on its draft Cost Recovery Implementation Statement (CRIS) for 2021-22. The CRIS outlines ASIC’s estimated regulatory costs for 2021-22 and how these will be recovered as industry levies under the industry funding model.
The indicative levies published in the draft CRIS are based on ASIC’s planned regulatory work and associated costs for the 2021-22 financial year.
ASIC is seeking feedback on the CRIS by close of business, Tuesday 28 June.
Retirement income covenant: APRA FAQs
APRA has published a series of frequently asked questions (FAQs) to assist registrable superannuation entity (RSE) licensees in developing their retirement income strategies, to meet the requirements of the new retirement income covenant.
The FAQs address:
- APRA’s expectations of RSE licensees in relation to developing their retirement income strategy and meeting the requirements of the retirement income covenant by 1 July 2022
- Whether RSE licensees can submit draft retirement income strategies to APRA for feedback
- What RSE licensees need to do from 1 July to implement their retirement income strategies
- Existing guidance on reviewing the outcomes of retirement income products
- Whether the retirement income strategy can cover the provision of financial product advice.
The FAQs have been developed with input from ASIC and follow on from a joint APRA/ASIC letter to RSE licensees in March (see ASFA Action issue 844).
Post-Election wrap up: ministerial and shadow appointments, Parliament, Budget
Following the election of a Labor Government on 21 May, the new Prime Minister, Anthony Albanese MP, has released details of his ministry. Of particular relevance to superannuation and financial service:
- Dr Jim Chalmers MP will be Treasurer
- Stephen Jones MP will be Assistant Treasurer and Minister for Financial Services
- Senator Katy Gallagher will be Minister for Finance
- Mark Dreyfus MP will be Attorney-General
- Clare O’Neil MP will be Minister for Cyber Security.
Parliament is expected to reconvene on 26 July. The Prime Minister and the Treasurer have indicated that the Government will deliver an economic statement to Parliament when it resumes, followed by a Budget in the second half of October.
The new Leader of the Opposition, Peter Dutton MP, has also announced details of his shadow ministry. This includes:
- Angus Taylor MP as Shadow Treasurer
• Stuart Robert MP as Shadow Assistant Treasurer and Shadow Minister for Financial Services
• Senator Jane Hume as Shadow Minister for Finance
• Julian Leeser MP as Shadow Attorney-General
• Senator James Patterson as Shadow Minister for Cyber Security.
Financial reporting changes for AFS licensees
ASIC has announced new financial reporting requirements for Australian Financial Services (AFS) licensees, after changes to the accounting standards set by the Australian Accounting Standards Board (AASB). Under the new requirements, AFS licensees’ financial reports must contain disclosures consistent with the financial reports of other for-profit entities, prepared under the revised accounting standards.
From financial years commencing 1 July 2021, for-profit companies, registered schemes and disclosing entities that prepare financial reports under Chapter 2M of the Corporations Act 2001, and which are not reporting entities, can no longer prepare special purpose financial reports (SPFRs) that do not contain all disclosures required in the full accounting standards. Accounting standards instead allow entities that do not have public accountability to use a simplified disclosure regime. Entities that have public accountability must comply with the disclosure requirements of the full standards. All entities must apply the full recognition and measurement requirements for assets, liabilities, income and expenses. Circumstances in which an entity has public accountability include where its debt or equity instruments are traded in a public market, or it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (this would include AFS licensees that hold client monies).
According to ASIC, the AASB’s new reporting regime will apply for the Chapter 7 financial reports of most AFS licensees, using the public accountability test. Some licensees would also be required to apply the disclosure requirements of the full standards to avoid doubt as to whether they have public accountability, or because they are large or sophisticated licensees with greater market impact. These include licensees that are regulated by APRA.
All licensees will be required to prepare a cash flow statement. In addition to single entity financial statements, consolidated financial statements must be presented where the licensee has controlled entities. There may also be some additional disclosures for licensees that had previously prepared SPFRs.
The new disclosure requirements apply from financial years commencing on or after 1 July 2021, but licensees may be able to defer any new disclosure requirements by one year. The changes will be given legal effect through a revised version of the prescribed ASIC Form FS 70 Australian financial services licensee profit and loss statement and balance sheet, to be available in late June.
ASFA understands that, given other existing regulatory requirements, there should be relatively few instances where an AFS licensee that is the trustee of an APRA-regulated superannuation fund is not already required to prepare financial reports compliant with ASIC’s new requirements. It should also be noted that the new requirements are completely unrelated to proposals to align the financial reporting obligations imposed on registrable superannuation entities with those applicable to public companies and registered schemes. Those proposals were set out in the Treasury Laws Amendment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022 that lapsed when Parliament was dissolved ahead of the Election (see ASFA Action issue 850).
Insurance in superannuation: determination of revised prudential standard
APRA has formally determined an updated version of Prudential Standard SPS 250 Insurance in Superannuation.
The update follows two rounds of consultation on proposed changes to the standard in late 2019 and early 2021. APRA published its finalised revisions to SPS 250 last November (see ASFA Action issue 833).
The updated version of SPS 250 takes effect from will commence from 1 July.
Family law superannuation interest rate determination
The Australian Government Actuary has made the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2022. The Determination sets the interest rate for adjusting the superannuation entitlements of separated and divorced spouses under splitting orders and agreements made under the Family Law Act 1975.
The Determination sets the interest rate for the adjustment period that comprises the financial year beginning on 1 July 2022 at 4.7 per cent. The Determination also provides the method by which the interest rate is calculated for an adjustment period that includes a period within that financial year.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
