Superannuation Alert 14.9.18
Financial Services - 14 September 2018
ASIC - Approval of AFCA Rules
Source: ASIC media release
On 12 September 2018, ASIC provided its approval to the Rules and Terms of Reference (the Rules) for the new Australian Financial Complaints Authority (AFCA). The Rules will be effective from 1 November 2018 when AFCA commences operating. AFCA has developed Operational Guidelines to assist entities to interpret the Rules.
ASIC also noted that superannuation trustees have until 21 September 2018 to sign up to the new AFCA scheme. Currently, around 64% of superannuation trustees have joined.
ASIC - Insurance in Superannuation Report
On 7 September 2018, ASIC released report REP 591 into insurance in superannuation. According to the report, "the consumer experience of insurance in superannuation is not always positive" and ASIC's survey generated the following findings:
- "while some trustees were able to finalise insurance-related complaints within a 45-day period on average, around a quarter of trustees in [ASIC's] sample exceeded 90 days";
- "the documented procedures of five trustees did not reflect the requirement to establish arrangements to provide written reasons for decisions"; and
- "there were some inconsistencies between the statements made by trustees about insurance cover in their disclosure documents…and the actual insurance policies".
As a result of these findings, "ASIC’s priority is to see that those trustees with averages over 100 days have reduced their complaints handling timeframes. If immediate action is not taken by trustees, ASIC will take further regulatory action, including considering enforcement options, against those trustees".
ATO - Regulatory update
On 5 September 2018, the ATO published Deputy Commissioner James O’Halloran and Assistant Commissioner Graham Whyte's speeches from the ASFA Policy Roadshow.
The speeches reflected on various developments in the changing super landscape. Among the issues identified were non-payment of super guarantee (SG) by employers, and the remedial effect single touch payroll (STP) is likely to have on this issue. On this subject, the speeches noted that "STP will give [the ATO] visibility of an employer’s SG obligation; each quarter [the ATO] will compare the reported obligation with the contribution made. These new data sources will add significantly to [the ATO's] understanding and identification of non-compliance".
The speeches signalled a positive outlook for the super landscape, and confirmed the ATO's ongoing commitment "to working with industry and fund members to ensure individuals can participate in and engage with the super system by gaining timely and improved visibility of their super information to allow them to manage their future retirement savings most effectively and efficiently".
Case law - Trustee application to vary terms of trust
On 6 September 2018, the Supreme Court of South Australia handed down its decision in H.E.S.T. Australia Limited v Inkley  SASC 127. In this case, the trustee applied to the court seeking an order under section 59C of the Trustee Act 1936 (SA) to vary the terms of the Health Employees Superannuation Australia Trust. The Court held that it had the jurisdiction to make the order and that it should exercise its discretion to entertain the application. The Court granted the order on the basis that it was appropriate to vary the trust deed and that the variations were ultimately in the interests of the members.
Additionally, the Court made some observations concerning the nature and statutory requirements of MySuper products. The Court noted that the creation of separate divisions by the deed was appropriate and consistent with the requirements considered in Retail Employees Superannuation Pty Ltd v Pain  SASC 121; namely, that a trust deed should set out separate divisions for members that hold a MySuper product and members that hold a Choice product.
Insurance in Superannuation Code - Release of Key Facts Sheet
The Code Owners of the Insurance in Superannuation Voluntary Code of Practice have released a Key Facts Sheet and Cover Sheet relating to the Key Facts Sheet. The intention of the two documents is for them to be used by trustees to provide high-level information to members in relation to insurance, in a uniform format.
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