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AIST responds to legislation on Royal Commission recommendations
AIST has provided feedback to the Government on its draft legislation to implement 20 recommendations from the Hayne Royal Commission.
AIST’s submission contains our responses to a wide range of recommendations including government recommendations on advice fees; enforceable codes, the hawking of super and insurance products; ASIC direction powers, and breach reporting.
While AIST broadly supports the recommendations, in some instances we have suggested greater clarity of definitions and materiality thresholds. In relation to the recommendation on financial advice fees, we propose that the recommendation be modified so that instead of there being a blanket bank on the deduction of any fees for personal advice from a MySuper account, the ban is limited to ongoing super-related advice for MySuper members. This would allow members that need advice, particularly as they approach retirement, to pay for one-off, advice services from their MySuper account.
APRA backs open banking for super
APRA has broadly supported the extension of open banking measures to the superannuation industry to boost transparency and engagement for fund members.
At hearings for the Senate inquiry into financial and regulatory technology held last week, APRA was questioned about possible impacts to competition between retail and profit-to-member funds.
APRA Executive Director of Policy and Advice, Heidi Richards, said while APRA was generally supportive of measures that would provide more transparency and engagement for super members, it hadn’t done any ‘specific thinking’ about ultimate industry impacts.
Ms Richards noted even though the structure of superannuation, including operational structure, was different to banking, with a lot of industry-level data structures in place that were not present in banking.
APRA was also questioned about how it approaches competition as part of its mandate, as well as its data collection capabilities and how it is facilitating start-up banking and super institutions to enter the industry.
Read the full transcript here.
ASIC’s ‘why not litigate’ approach boosts investigations
ASIC has reported a 52% annual increase in investigations against the four major banks and AMP In an overview of its enforcement and regulatory approach.
Overall, ASIC’s enforcement investigations have increased by 10 percent during the same period.
The six-monthly report highlights ASIC’s accelerated court-based enforcement, initiated as a result of the Financial Services Royal Commission. The report also covers ASIC’s other regulatory priorities including its oversight of the superannuation sector.
Key activities in the last six months incudes consultation on draft guidance for the new financial product design and distribution obligations which will come into effect in April 2021.
ASIC also conducted reviews into financial advice in super, member communications regarding the Protecting Your Super Package reforms, and the industry’s implementation of the Insurance in Superannuation Voluntary Code of Practice.
ASIC will soon communicate the findings of a review of board oversight and discretion in relation to executive variable pay schemes.
During the period, ASIC implemented an FSRC recommendation to introduce an accountability regime that applies key features of the Banking Executive Accountability Regime (BEAR) to its Commission and senior staff. This was accompanied by an update to its internal governance framework.
The report also features a breakdown of ASIC’s actions relating to all relevant recommendations from the Financial Services Royal Commission, including:
APRA set to ramp up its approach to risk culture
APRA has outlined its post-royal commission approach to risk culture signalling it will intensify the supervision of governance, culture, remuneration and accountability within regulated entities.
In a document published on its website, APRA says the greater regulation of governance, culture, remuneration and accountability, is intended to drive change across the financial services industry, initiated by Recommendation 5.7 from the Financial Services Royal Commission.
The Royal Commission recommended that APRA focus on building culture that will mitigate the risk of misconduct; use a risk based approach to its reviews; assess the cultural drivers of misconduct in entities; and encourage entities to give proper attention to sound management of conduct risk and improving entity governance.
Modern slavery template questionnaires for asset managers
A template questionnaire to assist funds to conduct due diligence reporting on modern slavery risks has been developed by an industry working group and made widely available.
The templates were developed by a working group and provide a framework for seeking information on modern slavery risk from asset managers. The questionnaire templates comprise a self-assessment as well as an investment activities questionnaire for the manager to complete.
The working group has made the templates available for all funds to use, and funds should make their own amendments and updates to suit their specific needs.
With introduction of the Australian Modern Slavery Act 2018, passed on 29 November 2018, funds that meet the threshold will have an obligation to report annually on the risks of modern slavery in its operations and supply chains, and where risks have been identified, provide information on the actions to address those risks.
Access copies of the templates below
Modern Slavery Investment Questionnaire Bonds
Modern Slavery Investment Questionnaire