Super Alert – 23 August 2019

This week’s Super Alert considers news releases from the ATO, APRA and ASIC in relation to their priorities for the next 12 months as well as the Government’s Royal Commission Implementation Roadmap.

ATO presentation in relation to 2019/20 focus areas

On 21 August 2019, the ATO released the presentation given by various senior staff of the ATO at the ASFA National Policy Roadshow. According to the presentation, the focus areas for the ATO for the next financial year are:

• Confirming the ATO’s view on “compensation received by super funds”;
• The “compliance approach for [APRA funds] in respect of pension tax bonuses”;
• “Transfer balance cap indexation”; and
• Improving “existing successor fund transfer protocol information”.

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APRA Insight Issue 1 2019 released

On 21 August 2019, APRA released the first issue of its “new-look” APRA Insight newsletter for 2019. Key matters covered in the newsletter include:

• Details about APRA’s “data modernisation agenda”; and
• Notification that APRA will “release the final SPS 515 and supporting prudential guidance in the third quarter of 2019. Given the key elements of SPS 515 are likely to remain largely unchanged, the standard’s effective date will [remain] 1 January 2020”.

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Treasury releases roadmap to Royal Commission recommendation implementation

On 19 August 2019, the Treasury released a “Financial Services Royal Commission Implementation Roadmap” (Roadmap) which sets out how the Government “will deliver on its comprehensive response to the Royal Commission”. In an associated media release, the Treasurer advised that under the Roadmap:

• “by the end of this year … around one third of the Government’s [Royal Commission] commitments will have been implemented or have legislation before the Parliament;
• by mid-2020 … close to 90 per cent of commitments, will have been implemented or have legislation before the Parliament; and
• by the end of 2020, [the] remaining Royal Commission recommendations requiring legislation will have been introduced”.

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ASIC enforcement update for January to June 2019

On 18 August 2019, ASIC released Report 625 which is its Enforcement Update for January to June 2019 (REP 625). During this period ASIC increased “the number of ASIC enforcement investigations by 20%…[and] wealth management investigations by 216%”.

The following areas were identified as strategic enforcement priorities:

• “harm caused by corporate gatekeepers, including auditors and liquidators, who hold positions of responsibility and trust, and who must lawfully discharge the obligations their positions carry”;
• “dishonest, misleading and deceptive conduct by those providing financial advice or financial services”; and
• “market misconduct that threatens to create uncertainty and erode investor confidence”.

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Treasury opens submissions for Financial Institutions Supervisory Levy Methodology

On 16 August 2019, the Treasury released a discussion paper which “seeks submissions on the design and operation of the Financial Institutions Supervisory Levies… [with a particular focus] on the methodology used for the application of the levies”. The levies are in place “to recover the majority of the operational costs of [APRA] and other specific costs incurred by certain Commonwealth agencies and departments” (such as ASIC, the ATO and ACCC).

Submissions on the discussion paper close on 13 September 2019.

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ASIC Commissioner speech in relation to enforcement activities

On 15 August 2019, ASIC Commissioner John Price delivered a keynote address at the Risk Australia Conference. In relation to the superannuation industry, Mr Price noted that members “are susceptible to the threats of poor product design and substandard governance and risk management”. Therefore, “ASIC is prioritising action against individuals for governance failures in financial institutions and superannuation trustees that result in consumer harm through poor governance and risk management”.
Mr Price stated that ASIC will undertake the following activities in the superannuation industry:

• “take decisive regulatory and enforcement action to deter misconduct;
• undertake the necessary supervision and surveillance of superannuation trustees, including more frequent on-site visits to ensure trustees act in the best interests of consumers;
• increase [ASIC’s] consumer testing and shadow shopping;
• further [ASIC’s] understanding of causes for consumer disengagement in superannuation; and
• work very closely with APRA to achieve good outcomes effectively and efficiently”.

Mr Price explained that ASIC will ask three questions as part of its litigation approach, (1) “…is there sufficient evidence of misconduct?”, (2) “…is it in the public interest for [ASIC] to act?” and (3) “…why not litigate? That is, why not take Court-based action in respect of the misconduct?”.

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This alert was written by Natalie Cambrell, Partner, Damian Tarulli, Special Counsel and Sanela Osmanovic, Associate.​​