In this edition:
Government and regulator interaction
As mentioned in June’s ASFA in Focus, we had provided ASIC with a written submission outlining reasons why superannuation clearing houses should be made exempt from the upcoming design and distribution obligations (DDO) regulatory regime. We’re pleased to see that our advocacy has led to Treasury announcing Government’s intention to make amendments to the application of DDO, with ASIC providing temporary relief that gives effect to this announcement in the interim period.
The ASFA Financial Accountability Regime (FAR) Working Group met with Treasury, APRA and ASIC to discuss Treasury’s release of the FAR draft legislation and explanatory materials for consultation. APRA has also released the Final Prudential Standard CPS 511 Remuneration. ASFA members discussed with the regulators aspects of the FAR, including deferred remuneration and notification obligations and regulatory powers and joint administration.
We facilitated a meeting between ASFA members and ASIC to discuss their proposed changes to their regulatory guidance about the hawking prohibition, RG 38. ASFA members raised some concerns about RG 38’s interaction with the proposed Retirement Income Covenant and the need to closely consider how the hawking prohibition applies to members approaching or have reached retirement.
Research and submissions
Our submission to Treasury about the proposed Retirement Income Covenant supported the covenant being principles-based and observed that the capacity of the covenant to achieve its stated objectives would be greatly aided by measures to address some of the challenges faced by trustees in implementing a retirement income strategy. Some challenges we noted trustees would face were availability of data about members and the need for appropriate guidance, including reforms to the regulatory framework of advice.
As mentioned in last month’s ASFA in Focus, we were pleased to see our feedback incorporated by the exclusion of the super industry, except in situations where personal financial advice has been provided, in the draft legislation for the Compensation Scheme of Last Resort (CSLR). Our submission to Treasury in response to CSLR’s draft legislation welcomed this exclusion and restated our support for a model that draws funding from the sectors where the compensation for unpaid determinations arises.
In last month’s ASFA in Focus we also welcomed the removal of civil penalties for individuals classified as ‘accountable persons’ under the Financial Accountability Regime (FAR), which is again feedback we provided to Treasury. Our submission to the FAR’s draft legislation suggested changes to what is considered a ‘significant related entity’ for trustees, recommended addressing contradictions between the FAR and APRA’s CPS 511 Remuneration, and consideration of successor fund transfers in setting timeframes for particular compliance factors.
Being a busy month for submissions, we also provided a submission to ASIC in response to their proposed changes to RG 38 The hawking prohibitions. Our submission recommends the exclusion of retirement products from the hawking prohibition, reconsideration of social media as a medium for a consumer to withdraw consent to be contacted, and the inclusion of further examples around different communicative technologies like chat bots.
We have also released a research paper exploring the number and cost of multiple super accounts. Our research finds that government initiatives have led to a substantial reduction in the number of unwanted multiple accounts, with the new ‘stapling’ measures expected to further decrease unwanted duplicate accounts.
Finally, we provided a submission to ASIC in response to their Cost Recovery Implementation Statement for 2020-21 (CRIS). Our submission noted that, depending on FUM, super funds face an increase in ASIC levies of around 10-20% from the previous financial year. Because of this we strongly recommend that scrutiny be applied to costs recovered from the super industry via levies.
Our comments on the Committee on Economics’ Inquiry into the implications of common ownership and capital concentration in Australia were featured in articles in The Daily Telegraph, The Australian, AFR, Investor Daily and Financial Standard.
Our Retirement Standard, which was updated for the June quarter, made a couple of appearances in the media through articles in the ABC and The Daily Telegraph, as well as radio including Smooth Sydney 95.3, 2GB, 4BC and FiveAA.
The submission to ASIC in response to their proposed changes to RG 38 The hawking prohibition was featured in an article in Money Management.
Events and Learning
On 8 September we’ll be delivering a briefing on Your Future, Your Super. There will be speakers from APRA, ATO and King &Wood Mallesons exploring expectations around the best financial interests duty and how the stapling mechanism and comparison tool will be administered.
During the month of September we’re delivering the following learning workshops: