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ASIC amends RG 97
ASIC is making a minor amendment to the way administration fees and costs need to be disclosed as part of the RG 97 requirements.
The amendment to the RG 97 instrument ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070 is to allow for additional text to be included in the administration fees and costs line item in the ‘Example of annual fees and costs’.
“For every $50,000 you have in the superannuation product, you will be charged or have deducted from your investment $[ ] in administration fees and costs, plus $[ ] regardless of your balance” (additional text underlined).
This is to cover the situation where a superannuation product issuer charges a fee that does not change with the balance then it must be disclosed separately. Including these words increases the accuracy of the example for particular fee structures used by issuers of superannuation products.
The RG 97 website will be updated to note this change shortly.
Click here for further information on the ASIC Instrument.
AFCA consults ahead of SCT closure
AFCA is seeking to amend its rules to ensure that arrangements are put in place to manage any remaining complaints business once the Superannuation Complaints Tribunal (SCT) ceases operation on 31 December 2020.
The proposed rule changes will allow AFCA to have oversight of any remaining business of the SCT once it finishes, including:
Other minor administrative rule changes will also be considered as part of the process. These include changes to clarify which ABS reports are used to index AFCA’s monetary limits and to correct a reference to legislation.
AFCA is seeking feedback before COB Friday 16 October 2020.
AIST will be holding a discussion on Thursday 8 October at 11 am to seek member feedback regarding these changes as well as other issues around other AFCA complaints handling. If you would like to participate, please contact Sam Lynch firstname.lastname@example.org
AFCA updates complaints dashboard
AFCA has updated its online complaints dashboard to include information about all financial complaints lodged with it from 1 July 2019 to 30 June 2020.
The updated Datacube allows historical comparison with complaints data from AFCA’s inception on 1 November 2018. The data includes information about the number of complaints lodged about a super fund, how long it takes a fund to resolve a complaint, and whether a fund responds to complaints in a timely manner. It also allows for side-by-side comparison across the industry.
Comparison of the two data periods, 8 months to 30 June 2019 and the following financial year to 30 June 2020 and 1 July 2019 to 30 June 2020 showed a sharp increase in complaints. AFCA CEO and Chief Ombudsman David Locke attributed this to the impact of COVID-19, pointing to spikes in complaints relating to travel insurance and early access to superannuation.
In total, AFCA has received 122,170 financial complaints since inception, with 9,295 (7.6%) of those relating to superannuation. Complaints relating to account administration make up half of all super complaints, with group life insurance (36.7%) and death benefit distribution (11.7%).
Early release applications update
The number of applications to the COVID early release scheme for week ending 13 September, was 42,000, according to APRA figures.
This represents a slight drop on the previous week’s 49,000 applications.
Of the applications received by funds, 25, 000 were initial and 18,00 were repeat applications. The total number of initial applications since inception of the scheme is around 3.2 million and repeat applications are 1.3 million.
More than $33 billion in early release has been paid out by super funds since the scheme began. The average payment made over the period since inception is $7,676 overall and $8,413 when considering repeat applications only.
ATO estimates 128,000 people ineligible for early release
The ATO has estimated that around 128,000 people who accessed their superannuation under the Government’s COVID early release of super scheme were ineligible.
Appearing before the Senate Select Committee on COVID-19, Jeremy Hirschhorn, the ATO’s Second Commissioner, Client Engagement Group, provided an update on a pilot study of single touch payroll data, saying that estimates showed 2-4 percent of those accessing super early were ineligible.
Questioned by Senator Jacqui Lambie on the next steps of the compliance program, Mr Hirschhorn said the ATO was completing a second-round pilot that would help inform its approach to compliance.
“I think it's fair to say that we've been encouraged by the high level of compliance, and that will be used to inform the intensity of our compliance actions. Obviously, we have constrained resources and we put our resources into the most important compliance issues, and I suppose we are currently forming what our ongoing compliance strategy is,” Mr Hirschhorn said.
Mr Hirschhorn also revealed that around 1,200 people had withdrawn money from super and then immediately recontributed it.
The ATO has written to these members advising that there is the potential application of the anti-avoidance rules and to consider their position in their next tax return in terms of claiming a deduction for the recontribution.
Transcript of super committee hearings now available
The transcript from the House of Representatives Standing Committee on Economics hearing on 10 September that featured representatives from ISPT, Industry Super Holdings, Mine Super, Hostplus, AMP, and Cbus has been released.
As reported previously in policy news, the hearings featured a broad range of questions covering ownership structures and their relationship to collectively owned vehicles, an implied lack of transparency in the funding of these vehicles; the impact of the early release scheme on fund liquidity; the impact of the pandemic on asset valuations; and the value of life insurance.
It was confirmed by Chair Tim Wilson that another hearing on superannuation is scheduled to take place before the end of the year and that future hearings would include industry super funds, retail super funds and industry associations.
Click here for the full transcript
ATO to return $588 million of unpaid super
The ATO has reported that $588 million will be placed into the superannuation accounts of nearly 400,000 Australians due to the one-off superannuation amnesty for employers reporting unpaid super.
While AIST welcomed the payout, we noted in media coverage that $588 million was a drop in the ocean. It is estimated employees miss out on more than $ 3 billion each year due to unpaid.
AIST did not support the amnesty which we believe rewards bad employers while penalises those who do the right thing.
The amnesty expired earlier this month.
We continue to support harsh penalties for employers who fail to pass on super entitlements to their workers.
Treasury clears path for virtual annual general meetings
Treasury has released provisions for the running of annual general meetings using digital tools to allow the participation of persons entitles to attend who are unable to physically attend the meeting.
The Coronavirus Economic Response determination made under section 1362A of the Corporations Act 2001 and allows an annual general meeting to be held using one or more technologies (such as conference or video calls) that give all persons entitled to attend a reasonable opportunity to participate without being physically present in the same place.
Any votes taken at the meeting must be taken on a poll, and not on a show of hands, by using one or more technologies to give each person entitled to vote the opportunity to participate in the vote in real time and, where practicable, by recording their vote in advance of the meeting.
The determination also includes a requirement to allow an opportunity for persons attending the meeting to speak or ask questions. Additionally, a proxy may be appointed using one or more technologies specified in the notice of the meeting.
ASIC consults on derivative transactions
ASIC has completed a second round of consultation on proposed exemptions to the ASIC Derivative Transaction Rules, with part of the exemptions due to expire on 30 September 2020.
The exemptions relate to determining additional financial markets for the ASIC Regulated Foreign Markets Determination.
The second stage of consultation follows a previous request for feedback undertaken in May 2020.
ASIC posted updates on the proposed amendments to the determination and the exemption for a final round of consultation.
AIST’s weekly update on the status of legislation
The current status of superannuation Bills currently before Parliament can be found here.