Issue 832, 9 November 2021
In this issue:
- Your Future, Your Super performance test: APRA FAQs
- Superannuation Data Transformation: APRA FAQs
- Records of Advice: ASIC guidance and examples
- Climate change financial risk: APRA and RBA joint statement
Your Future, Your Super performance test: APRA FAQs
APRA has published two new frequently asked questions (FAQs) in relation to the performance test introduced as part of the Government’s Your Future, Your Super (YFYS) reforms.
The new ‘general’ FAQs 9 and 10 outline:
- APRA’s intentions to publish the 2020-21 performance test values for all MySuper products
- the benchmark representative administration fees and expenses used for the 2020-21 performance test.
Superannuation Data Transformation: APRA FAQs
APRA has published four additional FAQs for registrable superannuation entity (RSE) licensees to provide further guidance on meeting the reporting standards for Phase 1 of the Superannuation Data Transformation project.
The new FAQs relate to:
- how an RSE licensee should submit reporting forms where there is no data to report on that form in relation to an RSE (general FAQ 1.17)
- the interpretation of trustee-directed products (TDPs) (general FAQ 1.18)
- what needs to be reported where an investment option with multiple asset classes does not have any strategic asset allocation benchmarks (FAQ 550.0n)
- the inception date that should be used when an investment option is determined to be a TDP at the reporting date but would not have been classified as a TDP at inception (FAQ 605.0s)
APRA has also updated:
- general FAQ 1.02, to clarify reporting due dates, including for historical information required under three of the new prudential standards
- general FAQ 1.12, to clarify reporting expectations for pooled superannuation trusts.
Records of Advice: ASIC guidance and examples
ASIC has released an information sheet on records of advice (ROA) and three ROA examples to provide clarity to financial advisers and advice licensees on their obligations when using ROAs to provide personal advice to retail clients.
INFO 266 FAQs: Records of Advice answers FAQs about ROAs, including questions about their usage, preparation and record keeping. The information sheet:
- explains four exemptions from providing a statement of advice
- covers the meaning of ‘significantly different’ (under the law) when providing personal advice in a further advice situation
- addresses some common misconceptions around ROAs.
The ROA examples, released alongside INFO 266, are annotated to help advisers understand the relevant requirements under the Corporations Act 2001.
This guidance follows ASIC’s recent release of an example ROA that can be used when providing advice under the temporary relief ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2021/268 until 15 April 2022. (See ASFA Action issue 814 in relation to the example ROA and issue 829 for the most recent update in relation to the temporary relief.)
Climate change financial risk: APRA and RBA joint statement
APRA and the Reserve Bank of Australia (RBA) have issued a joint statement on the actions they are taking to ensure financial institutions and the Australian financial system are prepared to respond to the financial risks of climate change
Some key points from the statement include:
- Climate change directly affects the economy and the financial system and is therefore closely related to the mandates of APRA and the RBA. In particular, APRA is tasked to ensure the financial safety of individual financial institutions and to promote the stability of the Australian financial system. Climate change will be a driver of change in the value of certain assets and income streams, and therefore poses a risk to financial institutions and financial stability.
- Both APRA and the RBA have been building capacity to conduct analysis and research on these issues and are actively considering the steps that can be taken to achieve their respective mandates in view of climate-related risks.
- APRA considers that effective decision-making by financial institutions needs to include a full consideration of risk, including the potential impacts of physical, transition and liability climate risks.
- By the end of 2021 APRA will finalise prudential guidance to help supervised entities to identify, monitor and manage climate-related risks. The guidance will address prudent practice in the management of financial risks arising from climate change, including with respect to governance, risk management, scenario analysis and disclosure. APRA is also considering a periodic climate risk self-assessment survey to help in understanding the financial sector’s alignment to the guidance.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.