Superannuation Alert 07.06.18
Financial Services - 7 June 2018
Productivity Commission - Productivity Commission draft report released
On 29 May 2018, the Productivity Commission released a draft report to assess "the efficiency and competitiveness of Australia's superannuation system and make recommendations to improve outcomes for members and system stability". It has made 22 draft recommendations.
A particular area of focus is multiple accounts. The Deputy Chair of the Productivity Commission, Karen Chester, said "with default funds being tied to the employer and not the employee, many members end up with another account every time they change job". As such, "a third of accounts (about 10 million) are unintended multiples. The excess fees and insurance premiums paid by members on those accounts amount to $2.6 billion every year".
In order to work towards a more efficient and competitive system, the Productivity Commission states that it "has proposed a package of changes — focused on delivering for all members — to modernise the system and deliver the best possible returns and products. Foremost, members should only be defaulted once, when they start working for the first time. The Commission is proposing that they should get to choose from a ‘best in show’ list of  high performing funds that have been identified by an independent and expert panel. And existing members should be able to readily switch to these funds".
The draft report is open for consultation until 13 July 2018.
Federal Parliament - Adjusting superannuation entitlements under Family Court orders - Determination made
- Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2018
- Explanatory Statement for Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2018
On 29 May 2018, the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2018 was registered, which relates to "the adjustment of superannuation entitlements of separated and divorced spouses, and of separated de facto couples (except in Western Australia)".
"The entitlements are provided under certain orders or agreements that split particular kinds of future superannuation benefits made in property settlements under the Family Law Act 1975 (Family Law Act). The determinations refer to orders or agreements providing for a base amount split of future superannuation benefits (one of two kinds of splits that can be made under the Family Law Act of most types of superannuation), payable in respect of a defined benefit superannuation interest or an interest in a self-managed superannuation fund". The Determination also provides the calculation method for the interest rate.
The Determination commences on 1 July 2018.
ASIC - Disclosure exemptions - new Australian Financial Complaints Authority
- ASIC Corporations (AFCA transition) Instrument 2018/447
- Explanatory Statement for ASIC Corporations (AFCA transition) Instrument 2018/447 and AISC Credit (AFCA transition) Instrument 2018/448
- 18-158MR ASIC gives disclosure relief during transition to AFCA
On 30 May 2018, the ASIC Corporations (AFCA transition) Instrument 2018/447 was registered.
The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Act 2018 (the AFCA Act) "establishes a single financial services external dispute resolution scheme: the Australian Financial Complaints Authority (AFCA)". The AFCA scheme will commence operations on 1 November 2018.
There are "a number of disclosure documents which are required to include details of a financial firm’s EDR scheme" and as such, the above Instrument will "give firms transitional relief from the requirements to update disclosure documents and periodic statements with AFCA’s contact details until 1 July 2019. This will give firms time to amend mandatory disclosure documents and adapt to the significant changes in the dispute resolution environment introduced by the AFCA Act".
ASIC - Regulatory Guide 165 Licensing: Internal and external dispute resolution updated
In May 2018, ASIC released the updated Regulatory Guide 165 Licensing: Internal and external dispute resolution which describes what AFS licensees must do to have a dispute resolution system in place that meets ASIC’s requirements.
The updated guide has been revised to reflect new information requirements in relation to predecessor schemes and AFCA, which will need to be provided to complainants from 21 September 2018.
APRA - APRA Statistics
- Statistics: Quarterly Superannuation Performance: March 2018
- Quarterly MySuper Statistics: March 2018
APRA has released its Statistics: Quarterly Superannuation Performance publication and Quarterly MySuper Statistics report, for the March 2018 quarter.
In an overview of the industry, "superannuation assets totalled $2.6 trillion at the end of the March 2018 quarter", which was an increase of 6.8% from March 2017.
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