- AIST Policy News - 9 August 2018
AIST Policy News - 9 August 2018
Royal Commission – super in the spotlight
Fees for no service, related party transactions, time delays in transferring members to MySuper products, relationships between funds and their fund managers and marketing expenses have emerged as key topics under examination in the first week of Round Five hearings of the Royal Commission.
The Commission - which is now firmly focused on super - has spent the greater part of the first four days examining evidence from representatives from the NAB/MLC wealth management group. Executives from AustralianSuper provided evidence late yesterday and, again, this afternoon.
Representatives from another 13 super funds and two regulators are still to appear, suggesting a tight format for the second week, beginning on Monday.
Transcripts of the first three days of the Round Five hearings can be found here.
In his opening statement on Monday, Senior Counsel Assisting, Michael Hodge QC outlined the range of topics the Commission will consider. This includes:
- Trustee compliance
- Multiple super accounts
- Marketing and funding
- Low cash returns
- Trustee appointments
- The monitoring of investment performance
- The transfer of accrued default amounts
- Regulator oversight
- Indigenous issues
Insurance in Super Code update
AIST is set to release a key fact sheet to help super funds implement the Insurance in Superannuation Code.
The Code continues to provide a framework that enhances member interests and builds confidence in life insurance through superannuation. This is regardless of the outcome of the Protecting Your Super legislation package currently before the Senate (which is due to release a report on Monday). The insurance part of the package covers cessation of cover, opt-in for young and low balance members.
AIST has argued in our submissions and before the Senate Committee reviewing the legislation that neither new insurance provisions nor a mandatory code are needed given the high take up rate of the voluntary Code and its focus on balance erosion and multiple cover issues.
The Code includes more than 170 requirements that may require changes to funds’ current business procedures. These requirements impact on Code reporting, member communications, digital footprints, governance documentation, process re-engineering, product design, training, changes to service level agreements and contracts, fund financials and vulnerable customer policies.
A key fact sheet in a standard industry format has been substantially agreed, with changes arising from consumer testing being incorporated. It is expected that fact sheet will be released in the next fortnight and published on the AIST website.
The Code-owners continue to meet to progress Code implementation, and the Code Transition Committee will resume meeting next month.
AIST member funds can provide input and ask questions by contacting AIST Senior Policy Manager David Haynes at email@example.com
Indigenous Roundtable – funds urged to develop hotline
Super funds have been urged to develop a hotline for Indigenous Australians at an industry roundtable held in Melbourne earlier this week.
The roundtable was attended by more than 50 representatives from profit-to-member funds, regulators, non-government organizations and members of the Indigenous Super Working Group.
To improve the experience of First Australian members, representatives were asked to examine whether they could:
- Develop a contact hotline for First Australians
- Develop a Reconciliation Action Plan
- Collect information about their First Australian members
- Implement the AUSTRAC Guidance on member identification
- Meaningfully involve First Australians in marketing material
- Simplify the language in communications and disclosure documents
- Provide support to local organisations, charities and NGOs to enable those organisations to deliver services to First Australians
All AIST member funds are encouraged to implement some or all the initiatives outlined above. AIST will produce publish a report of the day on our website by the end of September that will include a full list of initiatives that the industry can adopt to improve outcomes for First Australians.
If you have any questions, or would like to learn more about what your fund can do, please contact Jake Sims, Policy & Regulatory Analyst on (03) 8677 3855 or at firstname.lastname@example.org
Parliament set to debate super issues next week
After a six-week recess, Federal Parliament returns next week with debate expected on key superannuation matters.
On Monday (August 13), the Senate Economics Legislation Committee is due to hand down its report on the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018.
The Bill implements the Budget proposals to cap administration fees and prohibit opt-in insurance on low balance and inactive accounts, ban exit fees and consolidate accounts via the Australian Tax Office.
Meanwhile in the lower house, the Social Services Legislation Amendment (Supporting Retirement Income) Bill 2018will be introduced. This Bill contains new means testing rules for lifetime retirement income streams. These rules included those designed to allow for deferral periods in income streams, as well as a simplified assets and income test assessment. The Bill also contains changes to the Pension Work Bonus and Pension Loan Scheme.
Meanwhile several other superannuation bills remain in front of the Senate and on the notice paper, with additional debate yet to be scheduled.
AFCA opens its online membership application service
The Australian Financial Complaints Authority (AFCA) has now opened its online application process for all superannuation entities that are required to be members of AFCA.
Applications can be lodged via the AFCA website.
A fee of $350 will apply which will be deducted from a funds’ superannuation levy invoice when they are sent out in October 2018.
Once accepted, a confirmation email will be sent, providing a Member number and details to access a membership certificate.
AFCA will hold a membership webcast on Tuesday 28 August. Invites will be released soon.
For more information about the application process please email AFCA on: email@example.com or call 1300 56 55 62.
ASIC to put supervisors in big four banks and AMP
The Turnbull Government will provide a further $70 million to the Australian Securities and Investments Commission (ASIC) to introduce new enforcement activities that include deploying surveillance staff into the big four banks and AMP.
The additional funding follows a decision by ASIC's new Chairman, James Shipton, to re-focus ASIC's strategic direction on proactive enforcement and increase onsite supervisory approaches.
In media interviews this week, Mr Shipton suggested that teams of up to 20 ASIC agents could operate within the banks for weeks at a time to work alongside all levels of management to identify misconduct issues before they become widespread.
The package of measures includes:
- $26.2 million to accelerate and increase the intensity of ASIC's enforcement activities and enhance its capacity to pursue actions for serious misconduct against well-funded litigants, through the Enforcement Special Account;
- $9.4 million to boost supervision of the superannuation sector by strengthening audit and enforcement action to improve transparency and outcomes for superannuation members;
- $8 million to implement embedding dedicated staff within Australia’s four largest banks and AMP.
- $6.8 million to establish a dedicated taskforce which will conduct a proactive, targeted and thematic review into corporate governance to identify and pursue failings in large listed companies, including deploying staff to conduct new on-site surveillance and investigations.
- $6.6 million to implement the Government's reforms to whistleblower protection laws.
- $6 million to promote Australia as a world leader in the development and adoption of regulatory technology solutions for the financial services industry.
The remaining funds will be directed towards improving consumer access to the Financial Advisers Register; enhancing ASIC's enforcement work on the unfair contract term protections for small businesses; and ensuring compliance by licensees and financial advisers with the Future of Financial Advice laws.
APRA moves ahead with new data collection system
APRA is moving ahead to update its D2A data collection system after gathering industry feedback on what features are required for a future system.
A formal response to the feedback has been released on APRA’s website which provides an overview of the insights gained from the engagement process.
The report covers the specifics of APRA’s data transformation program, its research and engagement, desired solution features, as well as next steps for implementation.
The report states that APRA will seek a new solution which imposes minimal upfront change to how entities submit data, while encouraging the adoption of more advanced data submission methods over time.
APRA will be issuing a Request for Tender next month, to seek a software provider to deliver a data collection tool.
Funding boost for super advocacy centre
The Superannuation Consumer’ Centre (SCC) has received a one-off funding boost of $2.5 million from the Australian Securities and Investment Commission following enforcement action taken against ANZ and CBA.
The enforcement action was taken by ASIC over the cross-selling of retail superannuation products by ANZ and CBA.
SCC board member and SunSuper director, Jenni Mack, said the funding would allow the SCC to help individuals navigate the superannuation system by arming them with clear information.
Government reduces ASIC company search fee
The Government has committed to reducing and removing the fees for accessing information from the online business registries of the Australian Securities and Investments Commission (ASIC).
Beginning 1 July 2019, existing fees for company searches will drop from $40 to $19 in a move that will reduce the cost burden for journalists and businesses collecting information on company roles and relationships from online registries.
The fee exemption for journalists will also be broadened providing free access to all journalists for registry searches.
The government has said that both measures will reduce the barriers on those seeking information on companies, organisations or corporations.