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AIST has advocated for key amendments to the Putting Members’ Interests First Bill including a delay of implementation to 1 July 2020.
In our submission to the Senate Economics Legislation Committee, AIST argues that the proposed commencement date of 1 October 2019 is unworkable for funds and will create member confusion.
AIST highlighted that the proposed Bill requires trustees to notify affected members on or before 1 August 2019 however because the Bill cannot be passed before late in July, this leaves funds virtually no time to comply.
AIST advocated that insurance should remain in place for low balance members when the account is receiving contributions, arguing that the changes will be detrimental to new employees, people who are entering the workforce after raising families, and is likely to disproportionately affect women.
AIST recommended the following amendments to the Bill:
The Australian Prudential and Regulation Authority (APRA) has amended the application form for MySuper authorisation to better reflect new requirements of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019.
AIST welcomes the move and is pleased to see that APRA has acted on recommendations from AIST to remove a requirement to apply a weighting to relevant factors in relation to the undertaking of the legislated annual outcomes assessment.
APRA has reported that key areas to be amended on the application form include new covenants which require registrable superannuation entity (RSE) licensees to undertake annual outcomes assessments, and which specifically include MySuper products.
Amendments to the test in s.29T(1) of the SIS Act, which states that APRA must have ‘no reason to believe’ that the RSE licensee may fail to comply with the enhanced trustee obligations, the fees rules and the general fees rules in relation to MySuper products, have been updated
A new section has also been included seeking information from previous applicants on their breach history and the existence of any adverse findings against them.
The Australian Financial Complaints Authority (AFCA) has revealed that it is receiving twice as many complaints about superannuation than it had anticipated in its first six months of operation.
The Six Month Report has revealed that AFCA has received over 35,000 complaints so far, outpacing the initial forecasts expected for its inaugural year.
Regarding superannuation, 3,066 complaints have been made so far, accounting for nine per cent of all complaints that AFCA deals with.
Incorrect fees and costs were identified as being the biggest superannuation issue, with delays in claim handling; account admin errors; death benefit distribution; and denial of claims also featuring as common consumer issues.
But it is banks, insurers and credit providers, rather than super funds, that generate the most complaints to AFCA. The report identified banks with 12,305 complaints, followed by general insurers (6,839) and credit providers (5,447).
The most complained about financial products were credit cards (5,191), followed by home loans (2,921) and personal loans (2,704).
Key stats released by AFCA:
The Australian Prudential Regulation Authority (APRA) has released a new set of frequently asked questions (FAQs) on the development of Prudential Standard SPS 515 Strategic Planning and Member Outcomes and the introduction of an annual outcomes assessment resulting from recent changes to the Superannuation Industry (Supervision) Act 1993.
In May, APRA consulted on the proposed revisions to Prudential Standard SPS 515 Strategic Planning and Member Outcomes and now expects to release the final SPS 515 and supporting guidance in the third quarter of 2019.
APRA has indicated that supervisors will be engaging with RSE licensees on the implementation of SPS 515 over the second half of 2019 for a commencement of SPS 515 on 1 January 2020.
It is expected that all RSE licensees will have updated, or be in the process updating, their strategic objectives, business plans and expenditure management processes, to comply with the new standard from 1 January 2020.
A first Business Performance Review (BPR) against these strategic objectives is then required to be undertaken prior to 31 December 2020.
The passing of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019 will mean the Australian Prudential Regulation Authority (APRA) must now approve a party seeking to acquire a stake greater than 15 per cent in an RSE licensee.
APRA released a consultation on a draft form and guide in June and has now released a response letter and the new application form and instruction guide.
AIST stated in its submission that profit-to-member RSE licensees are run solely to benefit members and are not a source of profit to their owner(s) and this should be fully considered in the application to own or control an RSE licensee.
AIST proposed that some of the arduous requirements should be alleviated in cases where there are no changes to legitimate trust arrangements over ownership interests in the RSE licensee of a profit-to-member fund.
APRA responded to the proposal by revising the assessment of changes in directors where the beneficial owner of the shareholding does not change, whereby the information requirements are less onerous. The relief however is limited to where the shareholder is a director and when the change of share ownership involves a change of directors.
AIST also called for more guidance on what constitutes a change of control, advocating that if the RSE licensee is to become part of a group as a result of the acquisition, information is provided by the applicant and consequently assessed by APRA.
This puts the responsibility on the applicant to demonstrate how the various entities within a group structure will be effectively managed and supervised.
In response to this, APRA does not intend to provide examples of scenarios where the 15 per cent controlling stake trigger for approval will be met and did not appear to take on feedback regarding the detrimental impact on members that interrelated parties and outsourcing may have.
The Australian Securities and Investments Commission (ASIC) is working closely with the Australian Financial Complaints Authority (AFCA) to ensure consumers have relevant dispute resolution avenues made available to them in the event that a financial services licensee has not taken up membership with AFCA.
AFCA reported 58 financial services licensees and 217 credit licensees had not obtained AFCA membership and may therefore be in breach of their licence conduct obligations.
ASIC has taken action to intervene with the non-compliant licensees which has led to:
ASIC Commissioner Sean Hughes said that “ASIC's intervention means that consumers now have access to the independent dispute resolution scheme of AFCA if their complaints are not being properly considered by the financial services licensee or credit licensee.”
ASIC has advised that it will continue to work closely with AFCA to ensure that financial services licensees and credit licensees that are non-complying are identified. ASIC has stated it will take formal action to cancel or suspend licenses where entities fail to comply.
18 July 2019