Welcome to the latest issue of the KHQ Super Alert. This week, APRA released its new ‘Comprehensive Product Performance Package’ which provides further information about the investment performance of superannuation products. Meanwhile, ASIC remade three legislative instruments and reissued one regulatory guide with minor updates.

APRA – New performance metrics and insights released

On 24 September 2024, APRA issued a media release announcing the publication of its ‘Comprehensive Product Performance Package’ (CPPP). The CPPP is designed to collate the performance metrics that underly the annual performance test for superannuation products and analyse investment returns and fees for various products.

For example, while some MySuper and choice products may not have failed the annual performance test, they may be listed as having ‘significant poor investment performance’ or ‘significantly higher administration fees’ in the CPPP. According to APRA, the CPPP aims to ‘increase transparency and sharpen superannuation trustees’ focus on improving member outcomes’.

Click here and here for details.

Legislation – Operation of three legislative instruments extended

On 24 September 2024, the ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2024/620 was registered on the Federal Register of Legislation. The purpose of the instrument is to consolidate the following ASIC instruments, continue their relief and extend their operation to 1 October 2029:

• ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2021/716 (Cth); and
• ASIC Credit (Breach Reporting—Prescribed Commonwealth Legislation) Instrument 2021/801 (Cth).

The ASIC Corporations (Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508 was registered on the same day to continue the relief previously set out in ASIC Class Order 14/923 Record-keeping obligations for Australian financial services licensees until 1 October 2029.

All three of the previous instruments were repealed on the same day by the ASIC Corporations and Credit (Repeal) Instrument 2024/507. As referred to in our Super Alert of 9 August 2024, ASIC consulted about the remaking of these instruments last month.

Click here and here for details.

ASIC – Disqualification of company directors

On 20 September 2024, ASIC published an article written by Senior Executive Leader, Companies and Small Business, Claire LaBouchardiere, providing more guidance surrounding ASIC’s power to disqualify directors. The article outlines ASIC’s enforcement powers available against directors who are engaging in misconduct, how ASIC applies those powers and why these powers are important.

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APRA – Response to data collection enhancements

On 20 September 2024, APRA issued a media release announcing the publication of its response paper to industry consultation relating to updates to superannuation data collection proposals. As referred to in our Super Alert of 1 December 2023, APRA proposed enhancements late last year ‘for the collection of data on investments (including indirect investment costs), registrable superannuation entity (RSE) and RSE licensee profile and RSE licensee financials’. According to APRA, it ‘has responded to the [industry] feedback by updating reporting instructions and, where appropriate, revising the reporting standard to reduce the burden on supervised entities’.

Deputy Chair Margaret Cole said that ‘it is crucial that members, regulators, policymakers and other stakeholders have a complete picture of how trustees spend and invest the money entrusted to them. The new data will make it easier to scrutinise and reliably compare performance. Heightened transparency will also intensify the pressure on underperformers to improve’.

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ASIC – Reissue of RG 121

On 20 September 2024, ASIC announced that its Regulatory Guide 121 Doing financial services business in Australia has been reissued to replace the previous guidance originally published in June 2013.

The guide has been updated to:

• ‘remove references to expired or repealed AFS licencing relief’;
• ‘update the description of the Courts’ interpretation of ‘carrying on a business in Australia’; and
• ‘update descriptions of, or references to, financial products and services, obligations of AFS licensees, legislation administered by ASIC, other applicable rules and legislation, and ASIC’s regulatory documents to reflect the current legal and regulatory framework’.

Click here for details.

ATO – Criminal proceedings for fraudulent superannuation withdrawals

On 20 September 2024, the ATO issued a joint media release with the Australian Federal Police announcing that an individual has been sentenced to a term of imprisonment ‘for illegally submitting fraudulent applications to obtain the early release of…superannuation benefits’. It was found that the individual submitted several false financial hardship claims across a 12-month period in 2019-2020 (for herself and others), with the total benefits released amounting to over $202,000.

ATO Deputy Commissioner John Ford said that ‘this outcome sends a clear message to the community that we do bring those who exploit the tax and super system to account, particularly those who encourage and then benefit from others committing offences. We have robust systems in place that stop this sort of crime’.

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Federal Court – Death benefit decision

On 19 September 2024, the Federal Court handed down its judgment in Edwards v Retail Employees Superannuation Pty Ltd a trustee of the Retail Employees Superannuation Trust [2024] FCA 1091. In this case, the applicant appealed an AFCA decision to uphold a superannuation trustee’s decision to pay a member’s death benefit to her parents instead of the applicant, her previous partner. The applicant alleged that various errors of law were made by AFCA, however the Federal Court found that none of these alleged errors could be established, and the appeal was therefore dismissed.

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AUSTRAC – Consultation relating to changes to standard identification

On 18 September 2024, AUSTRAC issued a consultation paper titled ‘Assisting customers who don’t have standard forms of identification’. The purpose of the consultation is to seek industry views on proposed changes to ‘guidance on alternative identification processes reporting entities can use to assist customers who may have difficulty providing standard identification’.

The consultation period closes on 30 October 2024.

Click here for details.

Parliament – Inquiry into collapse of wealth management companies

On 17 September 2024, the Senate referred a new inquiry to the Senate Economics References Committee in relation to wealth management companies. The terms of reference outline that the Committee is to review ‘[t]he reasons for the collapse of wealth management companies, and the implications for the establishment of the Compensation Scheme of Last Resort (CSLR) and challenges to its ongoing sustainability’. The Committee’s report is due in March 2025.

Click here for details.