Superannuation Alert 06.07.18
Financial Services - 6 July 2018
Federal Parliament - Bill to strengthen APRA passes House of Representatives
On 25 June 2018, the Treasury Laws Amendment (APRA Governance) Bill 2018 passed the House of Representatives without amendment.
According to the Explanatory Memorandum, the Bill proposes to "[amend] the APRA Act to give the Governor-General the discretion to appoint a second APRA Deputy Chair", while retaining the "existing discretion to not appoint any Deputy Chair". The measure is designed to "improve the ability for [APRA] members to be able to manage new or more complex issues".
Federal Parliament - Super account transaction reporting obligations from 1 July 2018
On 27 June 2018, the Taxation Administration Member Account Transaction Service - the Reporting of Information Relating to Superannuation Account Transactions 2018 (the Instrument) was registered on the Federal Register of Legislation.
According to the Explanatory Statement, the Instrument "sets out the way in which superannuation providers…are required to give statements to the [ATO] in relation to an individual’s superannuation account transactions".
As a result of feedback during industry consultation, the ATO "will provide administrative concessions to support the transition" to this form of reporting from 1 July 2018 until 31 March 2019.
Federal Parliament - ASIC cost recovery of fees - Bills receive Royal Assent
- Corporations (Fees) Amendment (ASIC Fees) Bill 2018
- National Consumer Credit Protection (Fees) Amendment (ASIC Fees) Bill 2018
- Superannuation Auditor Registration Imposition Amendment (ASIC Fees) Bill 2018
- Superannuation Industry (Supervision) Amendment (ASIC Fees) Bill 2018
On 28 June 2018, the following Bills passed all stages of Parliament and received Royal Assent:
- Corporations (Fees) Amendment (ASIC Fees) Bill 2018 which is now Act No. 55 of 2018;
- National Consumer Credit Protection (Fees) Amendment (ASIC Fees) Bill 2018 which is now Act No. 56 of 2018;
- Superannuation Auditor Registration Imposition Amendment (ASIC Fees) Bill 2018 which is now Act No. 57 of 2018; and
- Superannuation Industry (Supervision) Amendment (ASIC Fees) Bill 2018 which is now Act No. 58 of 2018.
According to the Explanatory Memorandum to the Corporations (Fees) Amendment (ASIC Fees) Bill 2018, the Bills amend various Acts "to allow ASIC to better align its fees, by enabling ASIC to charge a cost reflective fee for the services it provides for a specific entity".
APRA - APRA issues industry guidance in relation to cash investments
On 29 June 2018, APRA issued a letter to all Registrable Superannuation Entity (RSE) Licensees notifying them that "[a]s part of a targeted desktop review, APRA has identified examples in the industry where ‘cash’ investment options appear to include exposure to underlying investments that would not generally be considered cash or cash-like in nature".
APRA's definition of cash under Superannuation Reporting Standard 530 - Investments states that cash "[r]epresents cash on hand and demand deposits, as well as cash equivalents. Cash equivalents represent short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value".
APRA identified "mortgage-backed securities, commercial bonds and hybrid debt instruments, credit-default swaps, loans and other credit instruments" as examples of assets that "do not typically exhibit the characteristics necessary to be considered as cash or cash equivalent".
APRA reminded RSE Licensees that it "will monitor RSE licensees’ cash investment options during the course of its supervisory activities on an ongoing basis".
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