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Funds expected to make early release payments within 5 business days
As outlined in an earlier AIST policy alert yesterday, APRA has published two new frequently asked questions (FAQs) setting out its expectations for super funds on the release of benefits under the COVID-19 temporary early access measures.
The FAQs determine that:
The first FAQ clarifies that super funds will generally be expected to make early release payments within five business days of receipt of a determination from the ATO.
APRA acknowledges that payments may take longer where the fund’s automatic checking identifies a red flag and additional fraud or other verification steps are required, or where the payment is being made from interests held in defined benefit funds.
It also acknowledges that “these timeframes may extend slightly where an RSE licensee experiences a high volume of applications at any particular time”.
Importantly, APRA notes that the process for the new early release measures differs from the usual process for making payments under existing early release grounds, as the application process has additional security controls, and funds are exempt from undertaking upfront customer verification in accordance with their anti-money laundering and counter-terrorism financing (AML/CTF) obligations.
The second FAQ relates to APRA’s position on civil penalty action and trustee liability where fraud nonetheless occurs when funds follow the procedure outlined above.
APRA acknowledges that the process for determining and paying amounts under the COVID-19 early release of super measure is different from the usual process for making payments under existing early release grounds.
The regulator notes that the AML/CTF Rule exempting RSE licensees from undertaking up-front customer verification means that funds will, in most cases, have less RSE licensee-verified information upon which to form a view about a payment.
However, APRA’s view is that it will be reasonable for funds to depart from their usual fraud control measures in order to ensure payments are made to members as soon as practicable, given the security controls around the application process and the fund appropriately acting on red flags identified by their automated checking process.
In circumstances where a fund can satisfactorily demonstrate to APRA that it has followed the approach set out in these FAQs, APRA says it would be unlikely to take action against the fund should a fraudulent payment/s occur.
Early release measures extended to temporary residents
Amendments to regulations means that temporary residents will be able to access $10,000 of superannuation on compassionate grounds this financial year only.
The Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2020 opens up eligibility for early access to super for those on student visas and working visas, so long as they fulfil the following criteria:
Prior to the amendments made in the Regulations, temporary residents would be precluded from satisfying the conditions of release relating to the compassionate grounds for coronavirus-related economic effects.
The amended regulations allow temporary residents to satisfy the conditions of release relating to these grounds.
These changes were initially announced by the Acting Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs on 4 April 2020, as part of a package of changes to temporary visa holder arrangements during the coronavirus crisis.
The process for applying for release is the same as that which applies for other proposed releases on compassionate grounds relating to coronavirus however temporary residents will only be able to access $10,000 of superannuation this financial year only.
ATO shares early release forms & confirms bank account responsibilities
The ATO has provided the industry with a look at the early release of superannuation forms that members will be using from Monday 20 April. In addition, they have provided an overview of security controls used in the process.
The three relevant documents are:
The ATO has also confirmed it will not be undertaking checks that will confirm the bank account is the member’s account. However, the regulator will check whether the bank account is a compromised account and will confirm it has a valid BSB and account number structure.
AFCA allows super funds more time to respond to complaints
In acknowledgement of the unprecedented level of customer enquiries stemming from the COVID-19 early release measures and sharemarket downturn, the Australian Financial Complaints Authority (AFCA), has extended the time super funds have to respond to financial complaints.
Super funds now have an additional nine days to respond to financial complaints lodged to AFCA taking the time frame from 21 days up to 30.
The extension comes into effect immediately and will apply to all complaints, including those relating to financial difficulty. The extension is temporary and expected to be in place for six months.
AFCA will be providing consumers with more realistic expectations about when they will get a response.
ASIC relaxes financial advice requirements
As outlined in an AIST policy alert earlier this week, ASIC has announced a temporary no-action position for superannuation trustees to expand the scope of personal advice that may be provided by the superannuation trustees as ‘intra-fund advice’.
Three temporary relief measures for financial advice requirements have been made, with ASIC acknowledging the surge in requests expected to be made to superannuation funds, financial advisers and registered tax agents for advice at this time.
Additionally, ASIC’s relief instrument allows:
ASIC’s relief and no-action position are temporary and subject to the conditions, including:
While no exact duration for the temporary relief has been given, ASIC will consider market developments and consult with key stakeholder before revoking the Instrument of relief and provide 30 days’ notice to the industry.
ASIC has updated its FAQ page in relation to the new financial advice relief/no action package and the process to apply for relief.
This includes addressing new and updated questions including:
ASIC updates work schedule to account for COVID-19 crisis
As previously announced, ASIC has temporarily changed its regulatory work and priorities to allow it and the entities it regulates to focus on the impact of COVID-19.
ASIC has now provided a further update on many of the activities that will be affected.
Commencement of changes to fees and costs disclosure requirements for managed funds and superannuation (Regulatory Guide 97)
ASIC is currently working on amendments to address issues that have arisen since the release of the revised Regulatory Guide 97.
ASIC is also considering amending the transitional arrangements for Product Disclosure Statements (PDSs) to allow entities to come into the new disclosure regime from 30 September 2020 and requiring any PDS given after 30 September 2022 to comply with the new disclosure regime.
Meanwhile, the regulator will continue to develop its proposals on fees and costs disclosure for platforms, but a planned public consultation paper has been deferred until further notice.
Internal dispute resolution review
ASIC is deferring the release of the updated standards until further notice but will continue to monitor entities and ensure they comply with existing IDR arrangements.
ASIC will provide feedback to interested stakeholders on the findings of this review.
For further information please contact AIST Policy and Regulatory Analyst, Zach Tung at email@example.com
APRA continues Super Data Transformation consultations
While APRA has announced a one-year deferral for data collections from funds in relation to the Superannuation Data Transformation project, other key parts of the project are continuing.
A revised MySuper Heatmap is due to be published with updated fees and costs data, but publication of the first Choice Heatmap has been delayed.
APRA is continuing its internal work on the project to assess the pilot data received and will finalise the topic papers on insurance arrangements, fees and costs disclosed, expense reporting and asset allocation.
AIST met with APRA this week to preview an early draft of the proposed reporting form for insurance arrangements and to discuss related issues. Next week, we will be discussing the proposed fees and costs disclosed form.
APRA is also being encouraged to also discuss these forms with super funds and other stakeholders.
For more information contact AIST Senior Policy Manager David Haynes at firstname.lastname@example.org
Extended start dates for some prudential standards
APRA has extended the start dates for some prudential and reporting standards as part of its suspension of planned initiatives in response to COVID-19.
The affected standards and their revised start dates include CPS 234 Information Security (third-party arrangements transition provisions) and CPS 226 Margining and Risk Mitigation for Non-Centrally Cleared Derivatives.
Click here for further details.
Improving insurance outcomes for vulnerable members
Code-owners of the Insurance in Super Code of Practice have begun work on improving insurance outcomes for vulnerable members.
The ‘vulnerable members’ workstream will focus on improving key insurance touch points including accessing insurance, making an enquiry, making a claim and making a complaint.
The regulator has previously emphasised the importance of this work and provided a clear indication of its expectations.
AIST is taking a lead role in managing this workstream that includes representatives from AIST member funds.
Meetings on the workstream will commence in the coming weeks.
For more information or to be involved in this project, please contact AIST Senior Policy Manager David Haynes at email@example.com.