- AIST Policy News - 2 May 2018
AIST Policy News - 2 May 2018
All steam ahead for AFCA
The Government has confirmed that the Australian Financial Complaints Authority (AFCA) will commence operating from 1 November, with super funds required to be AFCA members by 21 September, this year.
AFCA expects to consult with industry on its Terms of Reference (the AFCA rules) and the interim funding model shortly. AIST will be seeking feedback from member funds on key proposals.
The Superannuation Complaints Tribunal (SCT) will continue to accept complaints up until 1 November, from which point it will be closed to new complaints but will continue to deal with any complaints already on its books. Complaints lodged with the SCT will not be able to be transferred to AFCA.
The AFCA board was also announced yesterday, with Equip Super chair, Andrew Fairley, appointed as one of four board members and the Hon Helen Coonan as Independent Chair.
It is expected that Australian Securities and Investments Commission will shortly announce its position on disclosure for relief for superannuation funds in relation to the external dispute resolution changes.
AIST is conducting a roadshow with Helen Davis, SCT Chair in Melbourne on 9 May and in Sydney on 21 May. The roadshow will include a briefing by Ms Davis and Q and A session on what you need to consider in preparation for the transition to AFCA Click here to learn more.
If you have any questions on the AFCA transition, please contact Jake Sims, Policy and Regulatory Analyst, at email@example.com
APRA puts spotlight on operational due diligence and industry initiatives
APRA has published an update on its Operational Due Diligence (ODD) expectations in which it recognises the value of industry initiatives facilitating compliant and cost-effective implementation.
In the recently released Insight for 2018, APRA reiterates that the responsibility for evaluating and assessing the suitability of an investment manager remains with super funds, noting the information gathering and validation process can be performed either in-house or by a specialist external provider.
AIST considers the use of external providers to be a cost-effective solution for the vast majority of our members, and to this end, we have worked with industry (notably the Financial Services Council and ODD professionals) to provide a template that will ensure:
- The ODD process is conducted in a timely and cost-effective manner;
- Duplication is minimized;
- Time and resources dedicated to providing data and information are minimized;
- Investment Managers avoid the risk of multiple “messages” being disseminated;
- Comparison of reports from different providers is made easier.
The focus of the AIST Working Group is to ensure reviews are of an appropriate quality and easily comparable. It is important that RSEs have sufficient confidence in each review to make their own assessment regarding the operational risks of an investment manager.
The APRA Insight notes that the industry is in broad agreement on the overarching benefit of enabling as many super funds as possible to have access to robust ODD information. APRA also notes that the AIST Guidance Note and the FSC ODD questionnaire (developed in conjunction with AIST) will help clarify expectations and assist in the standardization of information and reports across the sector.
AIST is encouraged by the support of APRA, ODD providers, the FSC and the growing number of investment managers. This will ensure the industry moves quickly to establish a common methodology which enables RSEs to meet their fiduciary obligations as well as the expectations of APRA.
AIST member funds are encouraged to support the initiative and request each of their investment managers to provide an ODD report, ideally when the fund’s Investment Committee reviews each investment manager’s appointment.
For further information please contact David Haynes at AIST at firstname.lastname@example.org
APRA highlights accelerating cyber security risk
Ahead of the release of its new prudential standard on cyber security, APRA has warned that Australia is one of the top global targets for cyber criminals.
APRA’s latest insight publication notes that while no APRA-regulated entity has yet suffered significant losses due to an information security incident, the growing scale and sophistication of cyber criminals meant a material breach was “probably inevitable”.
Speaking earlier this year, APRA Executive Board Member Geoff Summerhayes warned that it was now possible envisage a scenario where a regulated entity was so badly damaged by a cyber-attack that it was forced out of business. While noting APRA deemed such an outcome to be unlikely, it was no longer beyond the realms of possibility, he said.
APRA’s current guidance on managing information security was issued in 2010 through Prudential Practice Guide CPG 234 Management of security risk in information and information technology. However, developments in the way technology is used by financial institutions, including the increasing use of third party service providers, and the continuing threat from cyber-crime has escalated to the extent that a binding prudential standard is now warranted.
The proposed new standard, CPS 234, expected to be finalised later this year with a view to implementation from 1 July 2019.
APRA adjusts prudential standards on auditing responsibilities
APRA has announced minor changes for Prudential Standard SPS 310 audit and related matters.
The amendments – which also impact on the Prudential Practice Guide SPG 310 - now require RSE licensees to submit the audit report to APRA within three months after the end of the period after the year of income to which the report relates.
The amendments seek to provide limited assurance addressing the RSE licensee’s compliance with its operational risk financial requirement (ORFR) strategy.
Changes announced for SMSF sector
The Government has announced it will increase the maximum number of members in a self-managed fund from four to six and that SuperStream will be extended to include SMSF rollovers.
Addressing the SMSF Expo in Melbourne last week, Minister for Financial Services, Kelly O’Dwyer hinted at further ‘positive announcements’ to be included in the budget, while also reiterating that the Government had no intention of making any further changes to the taxation of super.
Improving workplace gender equality would add billions to Australia’s GDP
Greater gender equality in the workplace could boost Australia’s GDP by $225 billion by 2025, according to a report released by global consulting firm, McKinsey.
The report - ‘The power of parity: Advancing women’s equality in Asia Pacific’ - notes areas in the economy where women are worse off including lower pay rates for work of comparable value; smaller superannuation payouts; strong disincentives for professional women to increase their working days; and continued low representation on company boards and in senior executive positions.