In this edition:
Government and regulator interaction
As part of our ongoing discussions about superannuation with Parliament members, we met with Senator the Hon Jane Hume and Stephen Jones MP. During our discussions we shared our members concerns around a variety of topics, including the upcoming release of the Your Future, Your Super (YFYS) regulations.
It was pleasing to see Treasury incorporating our feedback in draft legislation on two upcoming new regimes: the Compensation Scheme of Last Resort (CSLR) and the Financial Accountability Regime (FAR). Firstly, the super industry appears to be excluded from the CSLR except in situations where personal financial advice has been provided, which we pushed for in our feedback to Treasury. Secondly, civil penalties for individuals classified as ‘accountable persons’ under FAR is no longer proposed, which is again feedback we provided to Treasury.
We also appeared before the Trade and Investment Growth Committee in relation to the inquiry into prudential regulation of investment in Australia’s export industries, where we were asked questions about ESG considerations of super funds and what super funds consider when making investment decisions.
The More Flexible Superannuation Bill passed both Houses of Parliament in June, with a number of amendments to the original Bill. We are currently discussing with the ATO an efficient approach to administratively implement the ability for super members to re-contribute back COVID-19 early release of super into their super accounts. Real time updates on progress can be found on the ATO website.
We now have a dedicated DDO resources webpage on the ASFA website to assist ASFA members in complying with their DDO responsibilities. The webpage provides access to the ASFA / Deloitte Target Market Determination (TMD) Template, a filled-out example of the TMD template and some Q&As about DDO.
The ASFA Cyber Resilience Forum met for the first time in late July. The forum will be an opportunity for the super industry to collaborate, with the purpose of mitigating systemic cyber risks. We’re looking forward to seeing how this six-month pilot progresses and will be providing updates through the next six months.
Research and submissions
We provided a submission to APRA in response to their consultation on draft Prudential Practice Guide CPG 511 Remuneration. CPG 511 provides guidance to industry in meeting APRA’s requirements outlined in the prudential standard CPS 511 Remuneration, which is due to be finalised at the end of the year. Our submission raises concerns about the non-alignment between CPS 511 and the proposed Financial Accountability Regime (FAR), how CPS 511 proposes to apply to RSE licensees that do not have variable remuneration and its approach to oversight of the remuneration arrangements of third-party service providers.
Another submission we provided to APRA was in response to the draft Prudential Practice Guide on Climate Change Financial Risks CPG 229. While we’re pleased to see APRA providing its first formal guidance dedicated entirely to climate change risks, there are some concerns in relation to the ‘superficial’ level of guidance provided in CPG 229. Some other concerns we raised are the need for clearer linkages between CPG 229 and the broader prudential framework, as well as the need for clear guidance on disclosure.
Some of our previous comments on the Financial Accountability Regime (FAR) were mentioned in the AFR.
Events and Learning
In September we will be providing an opportunity to better understand one of the most significant reforms to the super system: Your Future, Your Super package. Speakers from APRA, ATO and King & Wood Mallesons will talk about expectations around the new best financial interests duty, how stapling will be administered and the legal implications for trustees. A worthwhile and interesting event to attend.
During the month of August we’re delivering the following learning workshops:
- RG 146 Superannuation
- Unpacking Your Future, Your Super
- Super Industry Update
- RG 146 Superannuation Refresher