AIST Policy News – 27 June 2019

Senate crossbench | Industry levy costings | Disclosure update


Senate cross-benches confirmed

The Australian Electoral Commission has advised that the writs for all Senate and House of Representatives contests have now been returned, with the Senate positions finally set.

The Coalition is four seats short of being able to form a majority, so it will be relying on key cross-benchers to pass through legislation, where there is no support from Labor or the Greens.

The new cross-bench line-up includes Jacquie Lambie, Rex Patrick (Centre Alliance), Stirling Griff (Centre Alliance), Malcolm Roberts (One Nation), Pauline Hanson (One Nation) and Cory Bernardi all confirmed.

As the Winter session of Parliament gets underway, AIST will be engaging with the Senators on key issues for the superannuation industry.

The composition of senate seats by party are as follows:

Coalition: 35 seats
Labor: 26 seats
Greens: 9 seats
One Nation: 2 seats
Centre Alliance: 2 seats
Jacqui Lambie Network: 1 seat

Cory Bernardi: 1 seat


ASIC forecasts industry levies for 2018/19

The Australian Securities and Investments Commission (AIST) has released its long-awaited Cost Recovery Implementation Statement (CRIS) outlining a forecast for regulatory costs and its activities for the 2018-19 financial year.

The CRIS provides transparency of ASIC’s costs and explains how ASIC’s regulatory activities will be cost recovered from each subsector it regulates.

The regulatory cost to be recovered for investment management, superannuation and related services via industry funding levies is estimated to be $59 million, out of a total ASIC recovery cost of $273 million for the 2018-19 period.

ASIC says the indicative levies published in the CRIS aim to help industry better plan for the actual levy which will not be billed until January 2020.

Amounts included in the report are likely to change once ASIC’s actual regulatory costs are known and published in December 2019 and the actual business activity metrics for each subsector are provided by regulated entities.


ASIC modifies fee and cost disclosure to align with PYS laws

The Australian Securities and Investments Commission (ASIC) has made a minor technical amendment to RG97 to reflect the requirements of the Protecting Your Super package regarding the banning of exit fees.

The amendment reflects the removal of a line in disclosure provisions that allows for the disclosure of exit fees.

ASIC has stressed that as part of the implementation of PYSP, funds need to take care that, from 1 July 2019, PDSs do not suggest that exit fees will be charged on superannuation products.

ASIC is currently undertaking a broader review of the fees and costs disclosure regime for superannuation.

The regulator has noted that a number of submissions raised the need to consider PYSP changes to the law. ASIC will take PYSP into account in the finalisation of its response to proposals outlined in CP 308.


Regulatory Guide 97 fee and cost disclosure

The Australian Securities and Investment Commission (ASIC) has received 35 submissions regarding ASIC’s response (CP308) to Mr Darren Mc Shane’s review of RG97 relating to fee and cost disclosure.

The CP 308 Review of RG 97 Disclosing fees and costs in PDSs and periodic statements seeks to ensure that consumers are able to access transparent and usable information on fees and costs of a financial product.

ASIC expects to settle any changes to RG97 this year. However, ASIC does not expect that it will require any changes to be implemented in the 2019 calendar year.

The work on RG97 is being headed up by Jane Eccleston, Senor Executive Leader Superannuation, ASIC, along with Dr Rhys Bollen,  Senior Executive Leader of ASIC’s Investment Managers team.

AIST’s submission to the consultation welcomed the transparency that CP 308 will achieve, but raised concerns about platform disclosure and aligning managed investment schemes with superannuation.

AIST will continue to advocate that both platform and managed investment scheme disclosure are high priorities.


APRA raises the bar on security of information risks

The Australian Prudential Regulation Authority (APRA) has updated prudential guidance relating to the management of information security risks and applies to all APRA-regulated entities.

The Prudential Practice Guide CPG234 Information Security replaces CPG 234 Management of Security Risk in Information Security.

The guidance will help entities comply with APRA’s new cross-industry prudential standard, CPS 234 Information Security, which is effective 1 July.

APRA has emphasised the need to maintain appropriate oversight of all third parties that manage information security on an entity’s behalf.

APRA CEO Geoff Summerhayes said the new standard would reinforce the financial industry’s ability to withstand information security threats and respond effectively when breaches occur.

“Although many institutions are well advanced, we recognise that the new requirements materially raise the bar across the entire industry and will take time to be fully effective. We expect to see continuous improvement. If an entity assesses that it may not be able to fully comply with the new standard from 1 July, it should immediately advise its APRA supervisor,” Mr Summerhayes said.


AIST calls for AFCA to name outsourced providers in determinations

AIST has made a submission to the Australian Financial Complaints Authority (AFCA) arguing that outsourced financial firms, such as group life insurers, should be identified within AFCA determinations.

AIST’s submission to AFCA on the publication of AFCA determinations says identifying all firms named in determinations was needed to further the objective of transparency. AIST is seeking the inclusion of the outsourced provider’s name in the search tool which the public may use to find determinations. AIST also used its submission to stress the importance of AFCA data being accessible to the public and the financial industry.

AIST also recommends that publication of a firm’s name in any determination involving commercially sensitive information should be dealt with on strictly a case-by-case basis. 

Given that AFCA has recently issued consultations regarding AFCA public reporting of data and naming firms within determinations, AIST has called for an industry roundtable to consult on the matter.

For further information regarding AIST’s submission, please contact Karen Volpato, Senior Policy Advisor at kvolpato@aist.asn.au