AIST Policy News – 20 June 2019

Industry levies | STP transition | Regulator enforcement

AIST calls for risk-weighting of industry levies as APRA’s budget grows

AIST has advocated that the raising of any levies on industry should be on a risk-weighted basis in response to consultation from the Australian Prudential Regulation Authority (APRA).

In a submission, AIST argued that while it is important for regulators to be well resourced to conduct their duties, the raising of any levies on the industry to cover regulatory function needs to be done on a risk-weighted basis to ensure fairness and efficiency.

Additionally, AIST argues that to make an informed assessment of the proposed levies, discussion papers should be released simultaneously with a Cost Recovery Impact Statement and an updated Regulator Performance Assessment.

The levies are set to recover the majority of the operational costs of the Australian Prudential Regulation Authority (APRA), and other specific costs incurred by certain Commonwealth agencies and departments.

The proposed funding levy for APRA has increased from a budget of $141.6 million in 2018-2019 to $186.1 million in 2019-2020.

The higher amount is primarily due to additional funding for the APRA’s new and expanded functions and the government response to the Financial Services Royal Commission.

Whilst it is important that regulators are well resourced to conduct their supervisory duties, AIST have reiterated that the raising of levies should be on a risk-weighted basis and consequently should take into account the volume of regulator activities spent on various entities and sectors.

AMP Super trustees hit with directions and conditions from APRA

AMP Superannuation Limited and N.M. Superannuation Proprietary Limited, the trustee bodies for AMP Super, have been issued directions and license conditions relating to a number of governance issues.

Australian Prudential Regulation Authority (APRA) issued the directions in relation to ongoing supervision of AMP Super and matters that emerged during the Financial Services Royal Commission.

APRA is requiring AMP Super to undergo ‘significant changes’ to governance practices to improve its management of conflicts of interest, governance and risk and breach remediation processes.

Additionally, APRA is directing AMP Super to address poor risk culture and to overhaul their accountability mechanisms. It will have to engage an external auditor to report on their efforts to address the remediation and governance issues highlighted by APRA.

This is the second public instance that APRA has used its new directions powers since their remit was broadened in April.

ATO material to assist with STP transition

The Australian Taxation Office (ATO) has released information to assist with the transition to Single Touch Payroll (STP) taking effect from July 1, including an information pack for employers.

The information pack details the requirements under the new STP regime including what employers need to communicate to their members.

The pack also includes the email and mail communications that the ATO intends to release to small business employers to help them get ready for the transition. 

Concerns have been raised that many businesses are not prepared for the move to mandatory digital payroll reporting.

A recent survey found one third didn't think the new system applied to their business, with one in 10 not yet compliant with the new systems.

ASIC urges trustees to prioritise member interests when handling insurance claims and complaints

The Australian Securities and Investments Commission (ASIC) is seeking feedback from industry on proposals to update its policy on the internal dispute resolution (IDR) requirements for trustees of superannuation funds.

ASIC have released a consultation paper that provides insight into common causes of lengthy insurance claims and complaints handling timeframes and what superannuation trustees can do to improve member outcomes.

In a letter to the industry, ASIC’s Senior Executive Leader of Superannuation, Jane Eccleston has said that complaints about insurance claims often raise complex and sensitive matters.

“It is essential that consumers who are dissatisfied with the treatment of their claim have access to a transparent, fair and timely complaints process,” she said.

“Our review of data from 46 trustees highlighted that many trustees took too long to resolve complaints through often deficient Internal Dispute Resolution processes,” Ms Eccleston said.

Submissions can be made by emailing, the deadline is 9 August 2019. Head to ASIC’s CP 311 page for more information.

ASIC approves AFCA rules change for legacy products

The Australian Securities and Investments Commission (ASIC) has approved changes to Australian Financial Complaints Authority (AFCA) rules which implements the government’s additional condition to AFCA’s authorisation.

As a result of ASIC’s approval, AFCA is required to give expanded access to the AFCA scheme to consumers and small businesses harmed by financial misconduct dating back to 1 January 2008.

To be an eligible legacy complaint, the complaint must:

  • Relate to a compulsory member of the AFCA scheme and also be a member of the AFCA scheme at the time of making the complaint
  • Not be an excluded complaint
  • Be made between the lodgement period 1 July 2019 to 30 June 2020

The Financial Planning Association of Australia (FPA) has raised concerns about the AFCA’s proposed legacy complaints rule changes and the potential impact they will have on the professional indemnity (PI) costs for financial planners.

AFCA has released updated Operational Guidelines outlining how AFCA will deal with legacy complaints. The guidelines explain in more detail how AFCA will interpret and apply its rules when considering complaints involving financial firms.

Conflicted SMSF advice draws civil penalty proceedings from ASIC

The Australian Investments and Securities Commission (ASIC) has commenced civil penalty proceedings against an SMSF advice company that allegedly pocketed over $730,000 in conflicted remuneration between 2013 and 2016.

The ‘SMSF Club’ advised its clients to set up self-managed superannuation funds then use their SMSFs to buy property marketed by a real estate agent, Positive Real Estate.

ASIC asserts that SMSF Club had referral agreements with Positive Real Estate and that its parent company, RM Capital, was aware of this referral agreement.

ASIC will contend that SMSF Club and RM Capital contravened the Act on as many as 259 occasions each. Each contravention attracts a potential civil penalty of up to $1 million.

ASIC believes that the payments could reasonably be expected to have influenced the financial product advice provided by the SMSF Club to its members.

ASIC contends that as the authorising licensee for SMSF Club, RM Capital’s failure to take reasonable steps to ensure SMSF Club’s compliance also breached the law.

FASEA approves financial advice courses

The Financial Adviser Standards and Ethics Authority (FASEA) has approved a number of courses offered by higher education providers under the Professional Standards of Financial Advisers Act.

This is the first round of approvals made by the standards authority and recognises 15 education providers to be able to provide graduate diplomas and bridging courses.

FASEA CEO, Stephen Glenfield said that FASEA had received a significant number of accreditation applications during the process.

“The release of the approved list of Bridging Courses and Graduate Diplomas gives advisers a clear pathway to meet the education standard by 1 January 2024,” Mr Glenfield said.

Find the full list of FASEA approved education providers here. The list will be updated as additional courses are approved.