This week’s Super Alert notes the release of APRA’s MySuper heatmaps and governance information paper, as well as a range of speeches including from Senator Jane Hume, Helen Rowell (APRA) and James Shipton (ASIC).
APRA Executive General Manager’s speech on APRA’s regulation of the superannuation industry
On 14 November 2019, APRA published a speech by Executive General Manager Suzanne Smith ‘reflecting on APRA’s regulation of the superannuation industry across 2019’.
Ms Smith’s comments included:
- ‘The pace of regulatory change has been rapid and we expect that to continue, particularly given the intent of the government to implement legislative change to effect the recommendations of the Royal Commission as quickly as possible.’
- ‘As we continue to see changes to business models and fund structures and shifts in the ecosystems that trustees are using to deliver change, we urge trustees to stay vigilant. It is crucial that trustees look at the whole picture to manage the risks and the sizeable projects that more and more trustees are undertaking in response to the increasing complexity of, and competition within, the industry.’
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ASIC grants relief from financial adviser compliance scheme obligations
On 14 November 2019, the ASIC Corporations (Amendment) Instrument 2019/1145 was registered. According to ASIC, the Instrument grants an ‘exemption to all AFS licensees from the obligation in the Corporations Act 2001 to ensure that their financial advisers are covered by a compliance scheme and from the associated notification obligations’. The exemption applies until 31 October 2022 (instead of 1 January 2020 as originally proposed – refer to our Super Alert of 18 October 2019).
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APRA unveils MySuper heatmap information paper
On 15 November 2019, APRA released an information paper on the superannuation heatmap that it will publish in December 2019, which will provide ‘insights into the outcomes being delivered by every MySuper product’.
The information paper ‘contains detailed explanations of how APRA selected the metrics and benchmarks used in the heatmap, and the methodology used to take into account important differences in products’ investment strategy and asset allocation’.
APRA Deputy Chair Helen Rowell stated that ‘The heatmap is intended to help drive improvements across the industry by highlighting which MySuper products are underperforming and where they need to improve’.
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Speech by Assistant Minister for Superannuation
On 15 November 2019, Senator Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology, delivered a speech in which, among a number of matters, she discussed consolidation of superannuation funds and noted that the Productivity Commission ‘estimated that cost savings of more than $1.8 billion a year could be made if the 50 highest-cost funds merged with 10 of the lowest-cost funds’.
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APRA outlines its approach to GCRA risks
On 19 November 2019, APRA released its information paper on ‘Transforming governance, culture, remuneration and accountability: APRA’s approach’. This paper provides detail on APRA’s plans ‘to scale up significantly its efforts to lift standards of governance, culture, remuneration and accountability (GCRA) across the industries it regulates’.
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ASIC Chair’s statement at the Parliamentary Joint Committee – Corporations and Financial Services
On 19 November 2019, ASIC Chair James Shipton delivered the opening statement at the hearing of the Parliamentary Joint Committee – Corporations and Financial Services.
According to Mr Shipton:
- Since February 2018 ‘there has been a 24% increase in the number of ASIC enforcement investigations’; and
- ASIC plans to ‘expand on [its] reporting beyond the existing publications… to produce a periodic consolidated ASIC update which will likely replace [its] current Royal Commission Update and [its] 6-monthy enforcement updates’.
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This article was written by Natalie Cambrell, Partner, Sanela Osmanovic, Associate and Joseph Cheung, Solicitor.