Super Alert – 21 February 2020

21 February 2020

The highlights of this week’s Super Alert include the progress of a number of Bills through Parliament and a joint letter from ASIC and APRA to all trustees about the proposed law reform on its their roles as regulators.

Treasury Laws Amendment (2019 Measures No. 3) Bill 2019 passes House of Representatives

On 12 February 2020, the Treasury Laws Amendment (2019 Measures No. 3) Bill 2019 was introduced into the Senate after being passed by the House of Representatives.

As referred to in our Super Alert of 12 December 2019 the Bill proposes to:

  • Amend the Corporations Act 2001 to ‘defer the transitional timeframes for [financial advisers]…to comply with the education and training standards requiring completion of an approved degree or equivalent qualification (by two years) and an approved exam (by one year)’;
  • Make various amendments to the Superannuation (Industry) Supervision Act 1993 such as:
    • clarifying ‘when a person has been ‘involved’ in a contravention of a provision, other than an offence provision’; and
    • applying ‘the existing fee cap on low balances when a product is only held for part of an income year’; and
  • Amend the Superannuation (Unclaimed Money and Lost Members) Act 1999 to:
    • clarify that a trustee does not need to provide information to the ATO ‘about money that ceases to be unclaimed or accounts that cease to be in-active low balance accounts or lost member accounts during the period that begins from the unclaimed money day and ends immediately before the day on which the statement is given to the [ATO]’; and
    • amend ‘the definition of inactive low balance account’ so that an account is not an ‘inactive low balance account’ if the member has elected to maintain insurance on that account’ under section 68AAA of the SIS Act.

Please click here to read more.

ATO updates PYS guidance

On 13 February 2020, the ATO updated its online guidance in relation to the reporting and paying of inactive low-balance accounts under the PYS Rules.

Please click here to read more.

ASIC and APRA joint media release on superannuation regulator roles

On 14 February 2020, APRA and ASIC issued a joint letter to all trustees about the proposed reforms to ‘expand ASIC’s role in superannuation to better promote consumer protection and market integrity in the superannuation industry’. As noted in our Super Alert of 7 February 2020, the relevant draft exposure legislation was released for public consultation on 31 January 2020.

The key points of the joint letter include statements from the regulators indicating that they are:

  • ‘Committed to working together to achieve better outcomes for members and reducing [the] regulatory burden to the extent feasible’; and
  • ‘Considering what additional communications about the superannuation regulator roles reforms are required to assist the industry to comply with their obligations…[noting that if] the proposed reforms are implemented, most trustees should not have to take additional steps to comply with the new regime’.

Please click herehere and here to read more.

Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures)) Bill 2019 receives Royal Assent

On 17 February 2020, the Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures)) Bill 2019 (referred to in our Super Alert of 7 February 2020) received Royal Assent and is now Act No. 3 of 2020.

The new Act implements a number of recommendations from the ASIC Enforcement Review Taskforce Report in order to:

  • ‘Harmonise and enhance ASIC’s search warrant powers’;
  • ‘Allow ASIC to receive telecommunications intercept material to investigate and prosecute serious offences’;
  • ‘Strengthen ASIC’s licensing powers’; and
  • ‘Extend ASIC’s banning powers’.

Please click here to read more.

APRA publishes speech by Deputy Chair Helen Rowell on accountability

On 20 February 2020, APRA released a speech delivered by Deputy Chair Helen Rowell in relation to accountability frameworks within regulated entities. In the speech, Ms Rowell noted the following:

  • ‘Accountability and remuneration – especially variable remuneration – go hand in hand. If remuneration is the carrot, then accountability, in the form of remuneration being withheld, is the stick… draft CPS 511 Remuneration proposes far more prescriptive requirements for regulated entities to ensure their remuneration frameworks align with the long-term interests of entities and their stakeholders’;
  • ‘It’s no secret that much of the [draft CPS 511] feedback was critical of what APRA was proposing, including the 50 per cent cap on the use of financial metrics in determining variable remuneration, longer vesting periods and clawback provisions’;
  • ‘The Government has foreshadowed its intention to introduce legislation creating the [Financial Accountability Regime] before the end of the year, however there is much that entities can and should be doing now to ensure they are well prepared’; and
  • ‘… there will be no single solution under the FAR: its implementation will necessarily vary in practice from institution to institution because every business operates differently’.

Please click here to read more.

This article was written by Natalie Cambrell, Partner, Sanela Osmanovic, Associate and Joseph Cheung, Solicitor. 

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