Blog: Inside track: Superannuation, Funds Management & Financial Services – Lexology

In the media

ASIC allows certain AFS licensees to use lease assets to satisfy their licence financial requirements ASIC – 29 April 2021 – These changes will allow certain AFS licensees to include, where the licensee is a lessee, a right-of-use asset in the calculation of their net tangible assets and, where the right-of-use asset is a current asset, adjusted surplus liquid funds and surplus liquid funds. More…

ASIC bans former Aus Unity AR over MySuper opt-outs MEDIA – 29 April 2021 – Former authorised representative for Australian Unity, Christopher Chan, has been banned for five years by the ASIC for misleading clients about MySuper opt-outs. The ASIC review of Chan’s emails found that he advised clients to opt out of MySuper, claiming that the MySuper product had higher fees than the fees on their existing superannuation balances. More…

AIST calls Senate Committee to reject YFYS bill MEDIA – 29 April 2021 – Some of the worst-performing super products have been carved out of the performance test putting consumers at risk of being stapled to a dud fund, according to the Australian Institute of Superannuation Trustees. More…

Your Future, Your Super reforms TREASURY – 28 April 2021 – The Morrison Government has released for consultation exposure draft regulations underpinning Treasury Laws Amendment (Your Future, Your Super) Bill 2021. More…

Super performance test to include admin fees MEDIA – 28 April 2021 – Super Consumers’ director, Xavier O’Halloran, said these reforms will significantly boost the outcomes for consumers, but there remains work to be done on the Your Future, Your Super package. Currently, not all investment options face scrutiny, this needs to change and be enshrined in legislation. More…

Changes to superannuation performance benchmark a welcome move ASFA – 28 April 2021 – The changes to the proposed superannuation performance benchmark announced by the Government recognise the important role that investment in unlisted assets and infrastructure plays in superannuation returns. The changes announced have the potential to mitigate investment distortions foreshadowed by the industry when the benchmark was first announced. More…

Treasury points to 21 MySuper under-performers MEDIA – 26 April 2021 – 21 out of 77 MySuper products are regarded as underperforming, according to the Federal Treasury. Under the current system, the members holding those accounts receive no notification that they are in an underperforming fund, and there is no trusted source of information for them to make their own informed judgements. More…

Climate could be the next great risk to global finance and the regulator is demanding…not much MEDIA – 25 April 2021 – Australia’s key financial system watchdog has issued new guidance on how institutions should handle climate risks, but is requiring them to do precisely nothing. More…

ASIC breach guidance unlikely to allay licensee concerns ASIC – 23 April 2021 – The Australian Securities and Investments Commission has left licensees in little doubt that their breach reporting workload is about to be significantly increased notwithstanding industry warnings about the impact of a regulatory tsunami (23 April 2021). More…

ASIC consults on draft guidance on breach reporting reforms ASIC – 23 April 2021 – ASIC has issued Consultation Paper 340, seeking stakeholder feedback on proposed updates to its draft guidance on upcoming breach reporting reforms (22 April 2021). More…

‘Spirit of intent’ focus of compliance guidance MEDIA – 22 April 2021 – The Financial Services Council is arguing for more industry self-regulation, describing Trowbridge as the “gold standard”. The ASIC has said there will be a focus on the spirit of policy, rather than a strict understanding on requirements when it comes to defining upcoming compliance regulations. More…

Adviser takes ASIC levy complaint to Commonwealth Ombudsman A veteran self-licensed financial adviser has sought hardship relief from the tripling of the Australian Securities and Investments Commission levy, outlining his complaints in a formal letter to the Commonwealth Ombudsman (21 April 2021). More…

ASIC only allowed to ban advisers under new disciplinary regime The proposed Financial Services and Credit Panel will determine whether to impose an administrative sanction, infringement notice, both, or not to take action (21 April 2021). More…

In practice and courts

ATO Alerts 29 April 2021 – Consultation is now open for the new Regulator Performance Guide Consultation is now open to the public on the Australian Government’s new Regulator Performance Guide. You can submit your feedback until Friday 21 May 2021. 28 April 2021 – Rollovers Find out about rolling member benefits between super funds using the SuperStream standard 27 April 2021 – Sufficient and appropriate audit evidence to support the acceptance of downsizer contributions As part of the annual SMSF audit, approved SMSF auditors must check for certain evidence if a member has made a downsizer contribution during the income year. 20 April 2021 – Extending transitional compliance approach to non-arm’s length expenditure – SMSF auditor obligations SMSF auditors do not need to modify Part A of the SMSF IAR where the compliance approach for non-arm’s length expenditure applies for the 2021-22 income year. 19 April 2021 – Super contribution caps will increase from 1 July 2021 Indexation of the super contribution caps means that concessional and non-concessional caps will increase from 1 July 2021. Read about what it might mean for your members.

ASIC Corporations (Amendment) Instrument 2021/230 ; ASIC Corporations (Licence Conditions—Treatment of Lease Assets) Instrument 2021/229; RG 166 Licensing: Financial requirements (reissued); PF 209 Australian financial services licence conditions (reissued) REP 689 Response to submissions on CP 336 Financial requirements: Treatment of lease assets ASIC has made changes to the financial requirements for some types of AFS licensees in relation to the treatment of leased assets. These changes will allow certain AFS licensees to include, where the licensee is a lessee, a right-of-use asset in the calculation of their net tangible assets and, where the right-of-use asset is a current asset, adjusted surplus liquid funds and surplus liquid funds (29 April 2021).

ASIC has amended Class Orders: [CO 12/752] Financial requirements for retail OTC derivative issuers [CO 13/760] Financial requirements for responsible entities and operators of investor directed portfolio services, and [CO 13/761] Financial requirements for custodial or depository service providers, to allow an AFS licensee to include a right-of-use asset in its calculation of net tangible assets: See 21-088MR (29 April 2021).

ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2021/268 Extends until 15 October 2021 the relief measure that allows financial advisers to provide a record of advice rather than a statement of advice to existing clients requiring financial advice due to the impact of the COVID-19 pandemic: See 21-072MR and FAQs.

ASIC INFO 253 Claims handling and settling: How to comply with your AFS licence obligations Assists firms who provide insurance claims handling and settling services to prepare and submit their AFS licence applications as soon as possible after 1 January 2021, and by no later than 7 May 2021: see 21-067MR.

ASIC Consultations: CP 340 Breach reporting and related obligations Released 22 April 2021; Comments close 3 June 2021. This consultation paper sets out our proposals for providing guidance to Australian financial services licensees and Australian credit licensees (credit licensees) on the breach reporting obligation that applies from 1 October 2021. The obligations require these licensees to notify, investigate and remediate breaches of the law in certain circumstances. More…

ASIC Corporations, Superannuation and Credit (Amendment) Instrument 2020/99 Amends the ASIC Corporations and Credit (Internal Dispute Resolution— Transitional) Instrument 2019/965 to preserve ASIC’s existing internal dispute resolution policy in relation to complaints received by financial firms before 5 October 2021.

APRA publishes FAQs on the Superannuation Data Transformation Phase 1 reporting standards The APRA has published a set of frequently asked questions (FAQs) for registrable superannuation entity (RSE) licensees about the Reporting Standards for Phase 1 of the Superannuation Data Transformation. The FAQs clarify issues raised by RSE licensees relevant to meeting reporting obligations. The FAQs are available on the APRA website at Frequently Asked Questions – Superannuation Data Transformation (23 April 2021).

APRA draft Prudential Practice Guide CPG 229 Climate Change Financial Risks (CPG 229) The guide is designed to assist APRA-regulated entities in managing climate-related risks and opportunities as part of their existing risk management and governance frameworks. APRA is seeking stakeholder feedback on the draft CPG 229 by 31 July 2021. The draft CPG 229 and supporting resource links are available on the APRA website at: Consultation on draft Prudential Practice Guide on Climate Change Financial Risks.

APRA draft taxonomy artefacts to assist superannuation entities prepare for APRA Connect APRA has released the response paper and 10 final reporting standards for the first phase of its multi-year Superannuation Data Transformation. The Response Paper and finalised reporting standards are available at: Consultation on APRA’s Superannuation Data Transformation. These new collections will be reported through APRA Connect. Final versions of these documents will be available before the external test environment is released to entities in June 2021. The draft artefacts include the data dictionary, validations, reporting taxonomy and XSD (to validate files).

Your Future, Your Super draft regulations released The Government has released for consultation exposure draft regulations underpinning Treasury Laws Amendment (Your Future, Your Super) Bill 2021. Consultation will be for four weeks and close on 25 May 2021. The draft regulations can be found Your Future, Your Super Regulations and associated measures.

Cases

MetLife Insurance Ltd v Hart [2021] FCA 410SUPERANNUATION – decision of Superannuation Complaints Tribunal setting aside “constructive rejection” of claim – where Tribunal failed to address the correct questions as to whether a rejection had occurred – where Tribunal failed to apply deed of cessation of cover in relation to historic TPD claim – where Tribunal failed to correctly apply definition of TPD in context of cessation of policy cover – matter remitted to Tribunal for further consideration.

Merchant and Commissioner of Taxation [2021] AATA 915SUPERANNUATION – Self Managed Superannuation Fund – responsible officers of corporate trustee – Applicants disqualified from acting as trustee or responsible officers of a trust – Applicants applied for adjournment pending separate taxation review – adjournment refused.

Australian Securities and Investments Commission v M101 Nominees Pty Ltd (No 3) [2021] FCA 354CORPORATIONS – financial products offered by first defendant and entities associated with second defendant – whether certain entities provided financial services or financial products without a financial services licence – whether financial products offered by entities associated with second defendant had similar features and are “inherently problematic” or “fatally flawed” – whether new investors’ funds were used to repay redemptions promised to old investors – whether offering of certain financial products entailed misleading and deceptive conduct – whether certain entities provided financial services to a “retail client” without complying with requirements in Chapter 7 of the Corporations Act 2001 (Cth) – whether certain financial products launched by second defendant to circumvent orders of this Court in proceeding VID 228 of 2020 CORPORATIONS – whether second defendant was “directing mind and will” of the relevant corporate entities – whether second defendant involved in contraventions under s 79 of the Corporations Act 2001 (Cth) and s 12GBCL of the Australian Securities and Investments Commission Act 2001 (Cth) CORPORATIONS – final relief – injunctions – whether jurisdiction enlivened under ss 1101B and 1324 of the Corporations Act 2001 (Cth) – jurisdiction enlivened CORPORATIONS – final relief – whether orders should be made permanently restraining second defendant from engaging in certain activities in relation to financial products Held: Orders made restraining second defendant from engaging in certain activities for a period of 20 years.

Legislation

Commonwealth

Act Compilation

Superannuation (Unclaimed Money and Lost Members) Act 199921/04/2021 – Act No. 127 of 1999 as amended Regulations

ASIC Corporations (Amendment) Instrument 2021/23028/04/2021 – This instrument amends three Australian Securities and Investments Commission Class Orders to allow an Australian financial services licensee to include a right-of-use asset in its calculation of net tangible assets.

ASIC Corporations (Amendment) Instrument 2021/31527/04/2021 – This instrument extends temporary measures aimed at facilitating financial reporting by unlisted and listed entities whose reporting processes take additional time due to current remote work arrangements, travel restrictions and other impacts of COVID-19. The temporary measures are intended to allow listed and unlisted entities up to one additional month to complete financial reports and have those reports audited in compliance with the financial reporting and audit requirements of the Corporations Act 2001.

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