- AIST Policy News–10 April 2019
ASIC delays Choice dashboards by up to four years
The Australian Securities and Investments Commission (ASIC) has this week announced a further delay to the disclosure obligations to ‘Choice’ product dashboards for up to four years.
This represents a further setback for these requirements which have been subjected to ongoing delays since 2015 after being introduced with the Stronger Super reforms. The requirements would have made it mandatory for super funds to provide a standardised disclosure of fees and performance, called product dashboards, for all their super products. Currently, funds only must provide this disclosure for their default (MySuper) products.
Without this disclosure it is extremely difficult for members who aren’t in default funds to compare their fund’s performance with other funds. Equally, members who are in a default fund and are considering switching to a Choice product cannot compare funds.
In a media release, AIST described the move as a significant blow for members in underperforming Choice funds.
ASIC says it granted the extension (by amending Class Order CO 14/34) as regulations required to give effect to the Choice product dashboard disclosure requirements have not yet been made.
ASIC has also amended a related instrument (ASIC Class Order [CO 13/1534]), which concerns disclosure of dashboard information in a periodic statement. The amendment continues to defer the requirement to include a dashboard in a periodic statement by allowing superannuation trustees to include a website address for the dashboard instead.
ASIC says it will adjust or revoke the relief once policy positions in relation to dashboards are settled.
Members’ best interests ignored in latest fee and cost disclosure proposals
AIST has raised concerns that the latest fee and cost disclosure proposals from the Australian Securities and Investments Commission (ASIC) will deny consumers who invest their super through platforms and managed investment schemes (MIS) important consumer protection measures.
As part of its response to the Darren McShane review of the RG 97 fee and cost disclosure requirements, ASIC proposes to defer its decision on platform disclosure and the alignment of managed investment scheme disclosure with that of superannuation.
In our latest submission on the proposals, AIST reiterates that ASIC’s proposals create an uneven playing field on disclosure across the super system. AIST has estimated that platforms account for over $820 billion in super savings under management. AIST’s submission also raises concerns about confusions which will occur with technical issues if the proposals are implemented as currently framed. AIST is also concerned that member testing of the proposals has commenced without any industry consultation about the testing methodology.
Move to improve access to death benefits for Indigenous Australians
Treasury is seeking insight from super funds on the accessibility of binding death benefit nominations to Indigenous Australians.
A Treasury discussion paper released this week outlines the legal requirements of binding death benefit nominations for trustees and examines unique Indigenous kinship structures. It includes examples of other places in the law where these kinship structures are accommodated.
Treasury plans to use the consultation process to identify if any law changes are required to address how the kinship structures of Aboriginal and Torres Strait Islander communities are treated by laws applying to superannuation death benefits.
In his final report, Commissioner Kenneth Hayne urged engagement with relevant Aboriginal and Torres Strait Islander peoples about ‘whether they, as the relevant users of the system, see difficulties about binding death benefit nominations that should be met.’
This followed evidence provided to the Commission by Nathan Boyle, who heads up the Indigenous Outreach Program at Australian Securities and Investments Commission (ASIC), and Lyn Melcer, Head of Technical Advice, QSuper.
AIST will be making a submission to this consultation. Feedback and enquiries can be directed to AIST’s head of advocacy Ailsa Goodwin at email@example.com up until Friday 24 May.
AIST recommends changes to APRA’s supervisory role
AIST has recommended a suite of changes to the role of the Australian Prudential Regulation Authority (APRA) including its supervision of super funds.
In a submission to the review of APRA’s capability, AIST makes 11 recommendations to improve APRA’s supervision of super funds including a more transparent strategy setting process; a two-way secondment program to support greater understanding of the industry; and for APRA to undertake a skills gap assessment.
Other recommendations include:
- APRA providing a data framework to identify what data is needed to benchmark performance
- APRA to provide additional skilled staff to meet its SuperStream responsibilities
AIST notes that a review of APRA’s capabilities is long overdue, with the last significant APRA capability review having taken place 17 years ago following the HIH collapse.
AIST has recommended that APRA undergo a capability reviews every three years as this would bring APRA into line with its expectations that super funds undertake triennial reviews of their frameworks.
Latest on Protecting Your Super implementation
The Australian Tax Office (ATO) has updated its Issues Log on implementation of the transfer of Inactive Low-Account Balance Members to and from the ATO.
This is the current version of the Issues Log is attached along with a draft form and process for members to ask the ATO that they not be transferred to the ATO as the owner of an inactive low-balance account.
Outstanding questions include:
- Is the $6,000 account balance calculated at an account or investment choice level?
- How should the accumulation component of DB accounts be treated?
- Are pensions included in the fee cap?
- Does an election to maintain insurance continue if an account becomes active and then inactive again?
- Must a refund for the fee cap be processed by 30 September 2020? (as per the Act) Or within 3 months of exit? (as per the Explanatory Statement)
For further information, please contact AIST’s senior manager policy David Haynes at firstname.lastname@example.org
Sweeping changes recommended for family law
The Australian Law Reform Commission (ALRC) has made 60 recommendations for reforming family law in a report tabled in Parliament yesterday.
The report, Family Law for the Future: An Inquiry into the Family Law System, recommends that the resolution of family law disputes be returned to the states and territories and that the federal family courts eventually be abolished.
Under the current system, children fall through the gaps between the family law courts, the child protection systems and the state and territory responses to family violence. The ALTC says can be remedied only by having a single court focused on the best interests of the child that is able to resolve all family law, child protection and family violence issues together.
In the federal family courts, family violence, child abuse or other complex factors now make up the majority of cases. However, there is no federal body with investigative powers akin to a child protection department and the family courts have no capacity to compel a child protection department to intervene in a family law case or to investigate the court’s concerns.
More broadly, the ALRC’s recommendations will ensure that the law provides a framework that assists families who are experiencing relationship breakdown to make arrangements for their children, property and financial affairs.
Super industry responds to new payment system
AIST and other industry bodies have signed an agreement with the ATO to address the impact of a new payments system for superannuation.
The payments system – known as New Payments Platform (NPP) - is a new real-time payments system, that automates and speeds up all sorts of financial payments, including superannuation.
The NPP is both an opportunity and disruption for the super system and SuperStream.
The NPP could be applied to superannuation as either a payment system (with data sent separately, as happens with other payment systems) or it can send a data file with a payment in a single transaction (which could provide a significant benefit). However, it must also be applied by financial institutions and employers in a way that is legally compliant, eg by meeting SuperStream standards.
To guide the assessment of new and emerging technologies (including NPP) that impact on superannuation and SuperStream, the ATO, AIST, ASFA and the SuperStream Gateway Network Governance Body have agreed on a set of principles.
As well as underlining the importance of legally compliant superannuation transactions, these principles will support the implementation of NPP transactions that help (and not hinder) transactions and ensure governance of superannuation transactions are representative of super industry stakeholders.