- AIST Policy News - 23 November 2017
AIST Policy News
Parliament backlog points to delay on super debate
With the ongoing citizenship saga and marriage equality, important superannuation legislation currently before Parliament is taking a back seat.
With only a few hours of debate in the Senate last week on the governance package (notably on the proposal to enhance APRA powers and mandate one third independent directors), it seems likely that the fate of key super measures will not be finalised in 2017.
It is worth noting that a number of amendments have been flagged on the Parliamentary website. In a controversial move, the Government has signalled that it will be moving an amendment which will propose that platforms are expressly carved out of the portfolio holdings disclosure measure. This is despite Treasury testifying in a Parliamentary committee hearing that the measure would not carve out platforms.
Other amendments being proposed include one from Labor Senator Katy Gallagher which proposes extending the enhanced trustee obligations to Choice products. Another one from Liberal Senator David Leyonhjelm would see directors unable to pass director payments through to sponsoring entities.
No progress has been made on the other bills, despite some appearing on the agenda. The package that includes the First Home Super Saver Scheme Bill 2017 – and containing Budget measures – is expected to run into problems with a lack of support from the crossbench – further complicated with the departure from the Senate of Jacqui Lambie. Similarly, many crossbenchers have indicated only lukewarm support for the Bill that establishes the Australian Financial Complaints Authority (AFCA) and absorbs the Super Complaints Tribunal (SCT).
The Bill which removes the salary sacrifice loopholes and extends choice to enterprise agreements has not been scheduled for debate.
Missing completely is the Bill to enshrine the objective of superannuation.
It is expected that debate over marriage equality will dominate the final two sitting weeks of Parliament. In addition, the Government’s decision to delay the next sitting week of the House of Representatives until 4 December may see an attempt from the Opposition and crossbenchers to revive a banking royal commission.
While this makes for a very interesting final two weeks in Parliament for the year, there is unlikely to be any movement on the super front.
Concerns raised about proposed complaints authority
AIST has reiterated its concern that dismantling the Superannuation Complaints Tribunal (SCT) and establishing the Australian Financial Complaints Authority (AFCA) could lead to poorer outcomes for super fund members.
Our joint submission with Industry Super Australia (ISA) to the AFCA transition team, warns that AFCA will be an inferior external disputes resolution scheme compared to the SCT, if key establishment issues are not addressed.
As outlined in our Parliamentary update above, the legislation to establish AFCA is currently before the Senate.
The submission outlines that a number of the AFCA measures may be contrary to a trustee’s responsibilities under the law and that a series of safeguards must be put in place in order to prevent funding inequities. Further, no comprehensive evidence base has been presented showing that the establishment of AFCA is in the best interests of superannuation fund members.
If you would like to comment please contact Jake Sims at firstname.lastname@example.org or on (03) 8677 3855.
Concerns remain with Productivity Commission survey
AIST remains concerned about key aspects of the revised Productivity Commission survey sent to member funds as part of its review into the efficiency of the super system.
While the Commission addressed some of our sector’s concerns with the original survey, it was agreed in a meeting with AIST member fund representatives and Industry Super Australia, that the revised survey still falls short in key areas, notably its design and the subjective nature of key questions. We also remain concerned about the confidentiality of commercially sensitive information supplied by funds and are seeking further legal advice.
For further information about the advice we are obtaining on the survey, please contact AIST senior policy manager David Haynes at email@example.com
Insurance code update
Following extensive cross-industry consultations including a national AIST roadshow, a draft Insurance in Superannuation Code of Practice is on track for release in early December.
AIST has been a very active participant across all levels of the Insurance in Super Working Group and has fought hard to ensure that any proposed changes to insurance offerings in superannuation are evidenced-based and in members’ bests interests. We are also very cognisant that some of our member funds remain concerned about the impact of code requirements on certain members who have special insurance needs.
Consultation on the draft code continues and we will keep members informed of any further key developments.
ASIC to consult on fee-for-service activities
The Government has this week released a consultation paper on the introduction of ASIC fees-for-services to complement the new industry funding model which commenced in July, this year.
While around 90 per cent of ASIC’s regulatory activities will now be recovered as part of the Government’s industry funding arrangements, the remaining 10 per cent will be recovered via fees-for-service.
The consultation paper looks at fees-for-service to recover the regulatory costs attributable to a single, identifiable entity. They apply to: licencing and professional registration services, processing of relief applications, and ASIC’s formal compliance review of documents lodged by entities under the Corporations Act.
The fees-for-service model will commence from 1 July 2018.
AIST will be preparing a submission on the consultation paper, which is due by 14 December 14 2017. Member feedback should be directed to AIST policy analyst Richard Webb at firstname.lastname@example.org
Super savings pool hits $2.5 trillion
Strong investment returns over the past 12 months have pushed the value of Australia’s super savings pool to greater than $2.5 trillion.
The latest APRA data show that the super savings pool grew by 8.8 per cent over the 12 months to September 2017 from $2.33 trillion to $2.53 trillion. The greatest growth was in APRA-regulated pooled funds (9 per cent) compared to growth in the self-managed sector of 7.8 per cent.
ASIC releases guidance for AFS licensees
The Australian Securities and Investments Commission (ASIC) has released new webpage guidance and information sheets to help limited Australian Financial Services (AFS) licensees and their representatives understand their key obligations. The new guidance covers the main issues that limited AFS licensees requested additional guidance on. This guidance follows an ASIC visit to limited AFS licensees during 2016-2017.
The guidance includes information on activities that limited AFS licenses can undertake as well as information on conduct and disclosure obligations.