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AIST is ramping up its advocacy on proposed changes to insurance in super, following today’s re-introduction into Parliament of the Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019.
This bill will prevent trustees from providing insurance on an opt-out basis to members who are under 25 years old and to members who hold products with balances below $6000. These were measures which had been removed from the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 by amendments in the Senate. The Bill has a proposed commencement date of 1 October, 2019.
AIST is concerned that the Bill does not contain exemptions to accommodate funds with younger members who need insurance and that the implementation timeline is unrealistic.
Meanwhile, the Morrison Government has released its proposed legislation agenda for the winter and spring sitting period. The Bill to remove grandfathered conflicted remunerationTreasury Laws Amendment (Ending Grandfathered Conflicted Remuneration)Bill is on the agenda. The Bill will end grandfathering provisions that allow financial advisers to receive conflicted remuneration under legacy remuneration arrangements.
Remuneration arrangements were heavily scrutinised during the Financial Services Royal Commission and this Bill was one of the first actions taken by the government in addressing the 76 recommendations from the Commission.
The grandfathering bill is likely to be dealt with before the end of the year, however no set date has been given for when it will be debated.
The other main legislative focusses for the government at this stage include bills for their tax plan, religious discrimination, provisions concerning the Australian Broadcasting Corporation, home affairs and immigration and the National Disability Insurance Scheme.
The Australian Council of Trade Unions, ACTU, has outlined its legislative priorities for superannuation, noting members’ interests must come first.
In a media release this week, ACTU Assistant Secretary Scott Connolly said the Morrison Government must pursue reforms which addressed the adequacy of the system, and ensured it was fit for purpose as the nature of work was changing.
Key priorities included
The ATO has this week released guidance on transition-to-retirement streams (TRIS).
The ATO’s Guidance Note outlines key changes to TRISs commenced since 1 July 2017, including:
The Australian Securities and Investments Commission (ASIC) is seeking feedback on its new product intervention orders, which became effective in April this year.
Under the new powers, ASIC can temporarily suspend the sale of products and services it deems to be a detrimental risk to consumers, even before a breach has occurred.
The new product intervention powers are aimed at giving ASIC a more proactive approach to reducing the risk of significant consumer detriment and allowing more timely and targeted intervention.
The powers apply to both individual products and entities, as well as the ability to enforce a market-wide suspension of a class of products. The product intervention orders can be made for an initial period of up to 18 months.
The powers were originally recommended in the 2014 Financial System Inquiry and received strong support from Financial Services Royal Commissioner, Kenneth Hayne. They were finally legislated in April of 2019.
ASIC is seeking feedback on the powers including definitions of the meaning of ‘significant consumer detriment’ and the factors needed to determine whether significant consumer detriment is likely to occur.
The deadline for feedback is 7 August 2019. ASIC aims to release its final regulatory guide in September 2019.
Submissions should be emailed to firstname.lastname@example.org
As noted in our last Friday’s policy alert, the Government has indicated to APRA it will pursue amendments to the SIS Act regarding the Protecting Your Super package that allow for the aggregation of a members’ interest in one or more products.
The amendments will also ensure the rights of members under fixed term insurance cover are not affected.
Although the proposed amendments will be made after the legislation took effect on Monday 1 July, APRA supports trustees proceeding on the basis that the amendments will become law in due course and has updated the PYSP FAQs to take this into account. The FAQs note that where a trustee determines that any breaches of the PYSP relating to either the product level application or the ‘fixed term’ insurance has occurred or will occur, the trustee should advise APRA. The advice should include how the trustee proposes to apply the law, including whether the Government’s signalled future law changes have been taken into account.
It is understood the Government will seek to amend the SIS Act to provide that:
Government measures to tackle the black economy – which can rob employees of wages and super entitlements – have been extended to another three industries.
As of 1 July, this week road freight transport, security and information technology industries are included in the taxable payment reporting system (TPRS) TPRS system. Businesses in these industries will have to report payments they make to contractors to the Australian Taxation Office.
The TPRS first applied to the building and construction industry and, following announcement in the 2017-18 Budget, was extended to the courier and cleaning industries.
From 1 July 2019, businesses will no longer be able to claim deductions for certain payments – including payment of wages and payments to contractors – if the business fails to comply with its obligations to withhold and report information to the Commissioner of Taxation.
The disincentive created by denying the deduction aims to complement existing penalties for failure to withhold amounts under the PAYG system.
Working in conjunction with the Australian Securities and Investment Commission (ASIC), the Australian Prudential Regulation Authority (APRA) has analysed the claims and disputes outcome for 20 Australian life insurers.
The online data on the admittance rate of cover type and channel for the year to December 2018, shows an 88 per cent admitted rate for group super on TPD claims, compared to a 59 per cent admitted rate where an individual (who was non-advised) was making the claim.
The claims paid ration for Death and TPD was also significantly higher in Group super than individual advised or non-advised.
Older Australians downsizing from their family homes have contributed $1 billion to their superannuation funds, according to Government figures released last week.
According to the Government, 4,246 individuals have utilised the Downsizer measure, with 55 per cent of contributions made by females and 45 per cent from males. Individuals from every state and territory have made Downsizer contribution with the top three states being, NSW (31%), VIC (26%) and QLD (24%).
The Downsizer Measure was announced in the 2017/18 Budget. The Measure which commenced on 1 July 2018, allows older Australians aged 65 and over choosing to sell their home and downsize or move from homes that no longer meet their needs, to contribute the proceeds from the sale of their home into superannuation up to $300,000. Couples are able to use it for the same home, making contributions of up to $300,000 each.
Wealth management investigations by the Australian Securities and Investments Commission (ASIC) have increased by more than 160 per cent in the five months to June 2019.
Speaking at the recent CEDA conference, ASIC Chair James Shipton said ASIC was continuing to progress litigation across the financial sector, arising from the 13 Royal Commission referrals and 30 case studies.
Mr Shipton used his address to clarify that while ASIC’s approach to misconduct was through the discipline of “Why not litigate?” this did not mean that ASIC would take every matter to court as the default options, or that it would pursue litigation where it would be inappropriate, or not in the public interest, to do so.
Mr Shipton added that ASIC was prioritising enforcement cases which hold individuals accountable for governance failures in financial institutions and super trustees.
Whistleblowers who seek to uncover corporate misconduct now have stronger legal measures to protect them from suffering detrimental consequences as a result of their actions.
Effective as of 1 July, this year, these protections will enable whistleblowers to seek compensation if they suffer loss, damage, or injury for making their disclosure.
The Australian Securities and Investments Commission (ASIC) believes these protections are important to ensure and encourage whistleblowers to come forward and raise their concerns to the company or to ASIC.
The new laws will also require trustees of superannuation funds to have a whistleblower policy in place from 1 January 2020.
ASIC has indicated it will consult on regulatory guidance for a whistleblower policy in due course.
The Australian Prudential Regulation Authority (APRA) is seeking feedback on its new powers to approve applicants wanting to own or control RSE licensees.
These new powers – which commence on Friday this week - were provided to APRA following amendment to the SIS Act by the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019..
The new powers enable APRA to consider the suitability of persons seeking to take a controlling stake (more than 15 per cent) in an RSE licensee to ensure the applicant in acquiring the stake will not impede the RSE licensee in meeting its fiduciary obligations under the SIS Act. The powers were a key recommendation of the Parliamentary Inquiry into the Trio Collapse of 2009.
APRA is currently consulting on the draft application form and guide. AIST will be writing a submission in response to the consultation and welcomes member input.
To provide feedback, please contact Zach Tung, Policy and Regulatory Analyst at email@example.com or 03 8677 3851.
The consultation closes on the 5 July 2019.
Australian academic, Hazel Bateman, professor in the School of Risk & Actuarial Studies at UNSW Sydney, has been appointed as the inaugural president of the newly-formed International Pension Research Association (IPRA).
The IPRA – which aims to be an authoritative voice of pension research - was formerly announced this week at the Organisation for Economic Co-operation and Development (OECD) in Paris.
The IPRA will facilitate a global network of pension researchers and build a broad individual and organisational membership.
Ms Bateman who is also the deputy director of the ARC Centre of Excellence in Population Ageing Research (CEPAR) will be supported by an executive board which includes Australian John Piggott, director of CEPAR. The IPRA will facilitate a global network of pension researchers, and build a broad individual and organisational membership.
04 July 2019