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Early release measures – industry consults with Govt and regulators
AIST has been working closely with ISA and ASFA to address our shared concerns about the implementation of the recently announced changes to compassionate grounds for early release of super.
In an industry meeting on Wednesday – hosted by AIST and attended by ISA, ASFA, FSC, Treasury, APRA, ASIC and the ATO – discussion focussed on the most administratively efficient mechanism for delivering payments to members that meet the eligibility requirements.
Concerns with the current process include:
Importantly, ASIC indicated that significant event notices are not required about the changes to compassionate grounds, nor is an update to PDSs.
The AML/CTF obligations present a bottleneck to processing payments and AIST, ISA and ASFA are in discussions with Treasury on the best way to address this, including contemplating possible exemptions from AUSTRAC. For payment of the monies, it is intended that the ATO will request bank account details from the applicant and pass these onto funds to use.
Suggestions have also been made for the payments to be managed by the ATO, in line with existing First Home Saver Super Scheme arrangements.
The meeting also focused on industry concerns relating to the pressure being placed on liquidity management and some funds being required to sell assets at less desirable prices which impacts all members of the fund, whether they have withdrawn money or not.
Following the meeting, the ATO also distributed a paper outlining the key discussion points to date.
In conjunction with the other industry associations, AIST continues to engage Treasury and the relevant regulators to ensure the most efficient implementation of the measures and to address to liquidly concerns. Further discussions are scheduled today and on Friday with the regulators and Treasury.
Meanwhile, AIST has called for super to be classified as an essential service, noting that work at some call centres could be adversely impacted by current or future travel restrictions.
In a media release this week, AIST also warned about moves by unscrupulous operators to use the newly-announced early release measures as a way to scam people.
For further information please contact AIST Head of Advocacy, Mel Birks on email@example.com
Regulators to focus on COVID-19 challenges – update on suspended work
APRA and ASIC have both suspended ‘non-essential’ policy and supervision initiatives until at least September 30 in response to the impact of COVID-19.
APRA says the suspension (which is subject to review) is intended to help financial service providers dedicate time and resources to maintaining their operations and supporting customers.
APRA plans to intensify its focus on monitoring and responding to the impact of the rapidly changing environment on entities' financial and operational capacity.
The suspension covers all substantive public consultations and actions to finalise revisions to the prudential framework that are currently underway or upcoming, including consultations on prudential and reporting standards.
Similarly, ASIC will focus its regulatory efforts on challenges created by the COVID-19 pandemic, particularly regarding the risk of significant consumer harm, serious breaches of the law, risks to market integrity and time-critical matters.
ASIC has signalled it will take a pragmatic approach with the firms it regulates, “mindful they may encounter difficulties in complying with their regulatory obligations due to the impact of COVID-19”.
In a meeting this week with AIST and other industry associations, APRA and ASIC confirmed the following initiatives would be on hold for the next six months at least:
ASIC will suspend:
APRA will suspend:
APRA has also announced the temporary suspension of its program to replace APRA's Direct to APRA (D2A) data collection tool with APRA Connect.
APRA says the temporary suspension of the APRA Connect project will provide some relief to entities and ensure flexibility for resourcing of work to ensure the financial resilience of entities and the provision of ongoing customer service.
Insurance Code review almost completed
The first review of the Insurance in Superannuation Voluntary Code of Practice is almost complete and will soon be published by AIST.
The rewriting of the reinstatement of the cover clause is the one outstanding issue which still needs to be resolved. Super funds have received differing legal advice about the legally-permissible operation of the reinstatement cover clause in light of the PYS and PMIF legislation. To date, APRA (and other government agencies) have been unable to assist in the resolution of this issue.
The Code-owners in consultation with the Code review committee have now made all the other necessary changes to align the Code with the recent legislative changes concerning insurance in superannuation.
The Code-owners have now commenced identification of potential Enforceable Code Provisions in the Code. This will require extensive consultation with Code-subscribers, ASIC and other stakeholders. It is also likely to involve a significant rewriting of the existing provisions.
Given that sittings of Federal Parliament have been postponed until August, the timetable for this process is unclear. One of the pieces of Financial Services Royal Commission-related draft legislation concerns Enforceable Code Provisions.
Expressions of interest sought for vulnerable members workstream of Insurance in Super Code
AIST and super funds subscribing to the Insurance in Super Code are looking for people to join a workstream to protect insurance needs of vulnerable members.
AIST, the other Code-owners and the Code Review Committee, are setting up a vulnerable members workstream to uplift industry standards in recognising the unique needs of some members when it comes to accessing insurance, making an enquiry, claiming on their cover or making a complaint.
In our discussions and correspondence with ASIC, the regulator has emphasised the importance of this work and provided a clear indication of its expectations.
If you would like to be involved with this important initiative, please contact AIST Senior Policy Manager David Haynes on DHaynes@aist.asn.au by Friday, 3 April 2020. The first meeting of the group will probably take place in about 4 weeks, with fortnightly meetings.
Federal Budget pushed back to October
The Government has deferred this year’s Federal Budget until 6 October 2020, with an intent to reframe the 2020/21 Budget on economic recovery from the Coronavirus.
The Government announced the postponement citing difficulties in being able to formulate reliable economic and fiscal estimates in the current environment.
It is unclear at this stage if Treasury will allow updated pre-budget submissions to be made prior to October in order reflect the vastly different landscape that the industry is operating in.
AFCA adjusts for changing regulatory environment
AFCA will modify its approach to dispute resolutions in the wake of all regulatory and legislative changes announced as part of Australia’s COVID-19 response.
AFCA will consider the circumstances and context in which lenders and other financial firms are currently operating when assessing complaints, given the multiple challenges currently faced by financial entities, including super funds.
AFCA intends to work closely with industry peak bodies, consumer groups and AFCA members to address issues faced by the financial services industry and consumers.
AIST is in regular dialogue with AFCA to discuss issues, concerns and other matters relating to COVID-19 and dispute resolution.
For further information, please contact AIST's Policy Analyst, Zach Tung at firstname.lastname@example.org
Suspension of face to face AGMs
ASIC is allowing companies required to hold an AGM by 31 May 2020 to postpone the meeting until at least 31 July.
ASIC has cautioned against holding an AGM while there are restrictions on large gatherings. The regulator has issued a formal ‘no action’ position allowing AGMs to be postponed. ASIC believes the two-month extension will be sufficient but will continue to review the situation.
Companies may still conduct AGMs using digital means through video conferencing, but ASIC cautioned that some entities may have restrictions within their own constitutions that need to be considered.
AIST is seeking clarity from the regulators as to whether there will be any changes concerning super funds and their Annual Member Meetings.
The ‘no-action’ position on virtual AGMs is conditional on the technology being able to provide every shareholder a reasonable opportunity to participate. This should include shareholders being able to ask questions of the auditor and about management; and voting occurring by a poll rather than a show of hands.
ASIC is also taking into consideration developments that may affect financial reporting and considering possible impacts and responses. At present, ASIC has found no widespread indications of any significant issues for entities in meeting their full-year and half-year financial reporting obligations at 31 December 2019.
FASEA recognises challenges to CPD point requirements
The Financial Adviser Standards and Ethics Authority (FASEA) has responded to industry enquiries relating to the operation of CPD requirements resulting from current COVID-19 business disruption.
FASEA have acknowledged the immediate challenges of face to face learning and CPD programs, and encouraged licensees to take a supportive approach to compliance. Given the extraordinary circumstances, FASEA has suggested video conferencing and webinar technology options as alternatives to face to face offerings.
FASEA raised that licensee CPD policies are required to include potential relief provisions to assist the needs of advisers affected by extenuating circumstances, such as illness.