Welcome to the latest issue of the KHQ Super Alert. This week, APRA released the annual performance test, the latest quarterly superannuation statistics as well as its corporate plan for the next financial year. The Federal Court handed down a further decision relating to design and distribution obligations and ASIC reported on its significant crackdown on greenwashing.

APRA – Results of the 2024 superannuation performance test

On 30 August 2024, APRA released this year’s results of the annual superannuation performance test for both MySuper products and trustee directed products. Pleasingly, no MySuper products failed the test this year. None of the non-platform trustee directed products failed the performance test either. Out of the 192 platform products that were tested, 37 products failed the performance test, which included ‘27 products which have failed for a second time and will now be closed to new members’.

APRA welcomed ‘the progress being made to address underperformance’ and ‘trustee activity to eliminate underperforming products, through the consolidation, restructuring or withdrawal of investment offerings’.

Click here for details.

APRA – Quarterly superannuation statistics released

On 29 August 2024, APRA released its quarterly superannuation statistics for the period ending 30 June 2024. According to APRA, total superannuation assets have grown by 9.1% to over $3.92 billion since the same time last year.

Click here for details. 

APRA – Organisational restructure

 On 28 August 2024, APRA issued a media release announcing a change in its internal structure. According to APRA, the restructure will see APRA’s ‘five industry supervision groups being managed in two supervision divisions’ which will be:

• a General Insurance and Banking division; and
• a Life Insurance, Private Health Insurance and Superannuation division.

APRA Chair John Lonsdale said that these changes would ‘streamline and simplify APRA’s decision-making processes at a time of heightened financial risk globally’.

Click here for details.

APRA – 2024-25 corporate plan released

On 28 August 2024, APRA released its corporate plan for the 2024-25 financial year, outlining how it will ‘maintain the strength and stability of Australia’s banks, insurers and superannuation trustees over the next four years’.

The priorities for the 2024-25 financial year include to:

• ‘[i]ncrease minimum standards for operational resilience through the implementation of Prudential Standard CPS 230 Operational Risk [Management]’;
• ‘[m]aintain a focus on cyber risk management due to heightened risk to system resilience in the operating environment, as well as sophisticated scams that impact the financial well-being of the community’;
• ‘[c]onduct a broad review of governance requirements, including those set out in…  Prudential Standard SPS 510 Governance…and Prudential Standard SPS 520 Fit and Proper’;
• ‘[l]ift expectations of entities to consider the financial impacts of climate risk in decision-making’; and
• ‘[c]ontinue to work with ASIC to ensure trustees are taking action to meet requirements set by the Retirement Income Covenant’.

In an accompanying media release, APRA Chair John Lonsdale said that the plan aims ‘to ensure the continued financial and operational resilience of APRA-regulated entities, while also responding to new and heightened risks’.

Click here and here for details.

Federal Court – Decision on design and distribution obligations

On 23 August 2024, the Federal Court handed down its decision in Australian Securities and Investments Commission v Bit Trade Pty Ltd [2024] FCA 953. This case considered the design and distribution obligations in the Corporations Act 2001 (Cth). An agreed statement of facts was submitted to the Court. The parties agreed that a financial product (being a credit facility) was issued, however there was disagreement about whether it was a product in respect of which a target market determination was required to be provided. The Court determined that no exceptions in the legislation applied and therefore it was a financial product which could not be issued to retail clients unless a target market determination was first made.

In an associated media release issued by ASIC, ASIC Deputy Chair Sarah Court said that the ‘outcome sends a salient reminder to the crypto industry about the importance of compliance with the design and distribution obligations. It is a legal requirement for financial products to be distributed to consumers appropriately. Consumers should receive the full protection of the law when dealing in crypto-asset products and [ASIC] will continue to take action to ensure this happens’.

Click here and here for details.

ASIC – Further action against greenwashing

On 23 August 2024, ASIC issued a media release reporting that it had made ‘47 regulatory interventions to address greenwashing’ in the 15 months up to 30 June 2024. These interventions have been summarised in Report 791: ASIC’s interventions on greenwashing misconduct: 2023-2024, and according to ASIC are ‘aimed at stamping out misleading and deceptive conduct in relation to sustainable finance-related products and services’.

ASIC Commissioner Kate O’Rourke said ‘investors and consumers are entitled to accurate and reliable information so they can make informed and confident investment decisions. Greenwashing claims mislead investors and consumers, and undermines confidence. Where we’ve identified greenwashing misconduct, ASIC has intervened to protect investors and consumers, and to maintain market integrity’. 

Click here for details.

Parliament – Family Law Amendment Bill

On 22 August 2024, the Family Law Amendment Bill 2024 (Cth) was introduced to the House of Representatives. According to the Explanatory Memorandum, changes are proposed to the Family Law Act 1975 (Cth) to address recommendations from three inquiries into the family law system by two Parliamentary Committees and the Law Reform Commission.

Some superannuation-related changes are also proposed including:

• inserting ‘a new provision providing a power to make regulations requiring superannuation trustees to review the actuarial formulas used to value superannuation interests for family law property matters to ensure courts have access to accurate and reasonable valuations of superannuation interests when determining a just and equitable property division for separating parties’;
• introducing ‘a duty of disclosure that applies to separating de facto couples in Western Australia who are allocating their superannuation interests’; and
• requiring ‘each party in [a family law] proceeding [to] give all relevant information and documents to the family law courts and each other party in a timely manner’ – this extends to third parties such as superannuation trustees that may be joined to proceedings.

Click here for details.