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Inside track: Superannuation, Funds Management & Financial Services

25 September 2019

#Superannuation, Funds Management & Financial Services

Inside track: Superannuation, Funds Management & Financial Services

In the media

APRA responds to court decision on IOOF action
The court has dismissed APRA’s application for a finding that IOOF entities, directors and executives had contravened their obligations under the Superannuation Industry Supervision Act 1993. Accordingly, the case cannot proceed to a hearing on penalties, including disqualification (20 September 2019).  More...

ASIC remakes instrument about departed former temporary residents’ unclaimed superannuation disclosure
ASIC has remade Class Order [CO 09/437] Departed former temporary residents superannuation – Disclosure relief, which was due to expire on 1 October 2019. The new instrument, will continue to provide relief for trustees of regulated superannuation funds from certain obligations in the Corporations Act 2001 (19 September 2019).   More...

Government passes legislation to protect low balance and young superannuation members
The retirement savings of Australians will be protected from inappropriate insurance with the passage of legislation through the Parliament. The Treasury Laws Amendment (Putting Members' Interests First) Act 2019 will require insurance in superannuation for new members under 25 and members with low balance accounts to only be offered on an opt-in basis from 1 April 2020 (19 September 2019).  More... 

Extending the superannuation guarantee amnesty to reunite members with unpaid super
The Government reintroduced legislation to establish a one-off amnesty for historical underpayment of superannuation guarantee. The Bill incentivises employers to come forward and do the right thing by their employees by paying any unpaid superannuation in full (18 September 2019).   More...

Unpaid super amnesty extended
Senator Jane Hume, announced a Bill to help incentivise employers to come forward and pay any unpaid super in full, including interest, therefore avoiding late payment penalties. However, those who did not take part in the amnesty, faced higher penalties when they were subsequently caught (18 September 2019).  More... 

AFCA makes submissions to two ASIC consultations
AFCA has made submissions in response to ASIC consultations, as part of our commitment to be a fair, ethical and trusted service (18 September 2019).  More... 

ClearView compliance review results in $730,000 compensation to clients
Australian financial services licence holder ClearView Financial Advice Pty Ltd (ClearView) has completed a review and remediation program for over 200 clients who received poor life insurance advice. A sample review of ClearView's advice files highlighted broad areas of concern such as inadequate needs analysis for client, insufficient explanation about the pros and cons of using superannuation to fund insurance premiums (18 September 2019).  More... 

Online fraud syndicate dismantled after allegedly siphoning millions from shares and superannuation accounts
A 21-year-old Melbourne woman is due to appear before Court as part of investigations into a major fraud and identity theft syndicate, which resulted in alleged thefts from the superannuation and share trading accounts of innocent victims worth of millions of dollars (17 September 2019).  More... 

Consultation begins on new ASIC powers
Treasury is seeking feedback on its draft legislation that would expand the supervisory powers of the ASIC. The exposure draft legislation is further evidence of the government’s commitment to strengthening financial regulators like ASIC and restoring trust in the financial system as part of our plan to build a stronger economy (16 September 2019).  More... 

FSC supports no hawking of insurance
CEO Sally Loane said it is important to note that the industry has already made significant improvements through better use of monitoring and oversight, through remuneration practices, appropriate incentives, culture, training and the FSC Life Insurance Code of Practice. These anti-hawking measures ensure the conduct on all calls is at the highest standards (17 September 2019).   More... 

AFCA targets insurers in national tour
The Australian Financial Complaints Authority is kicking off a six-month roadshow aimed at addressing Australians’ lack of awareness on how to resolve a dispute with insurers and other financial firms (16 September 2019).  More...

Financial Institutions Supervisory Levy Methodology
AIST supports focussed and properly resourced regulators however recommends that the raising of any levies on the industry to cover this should be on a risk-weighted basis (13 September 2019).  More... 

Taking action on the Banking, Superannuation and Financial Services Royal Commission – Consultation on new financial product design and distribution obligations
The Coalition Government has released for consultation exposure draft regulations to support the operation of updated Design and Distribution Obligations for financial products, which will further improve consumer outcomes requiring issuers and distributors of financial products to ensure products are only sold to customers for whom they are likely to be suitable (12 September 2019).  More...  

Inquiry into FinTech a boon for Australian consumers

The Financial Planning Association of Australia welcomes the creation of a Senate Select Committee on Financial Technology and Regulatory Technology as recognition of the critical roles Fintech and RegTech play in delivering affordable, high-quality financial advice to Australian consumers (12 September 2019).  More... 

ASIC prepares to be primary super conduct regulator
ASIC commissioner Sean Hughes has made it clear the regulator is already positioning itself to be the primary conduct regulator in superannuation (12 September 2019).   More... 

Super funds also exposed to ASIC search warrant powers
Superannuation funds face the same likelihood as financial advice firms of being subject to an ASIC search warrant under new exposure draft legislation revealed by the Government. The draft legislation makes clear that ASIC would be able to seek a search warrant under the Superannuation Industry (Supervision) Act as well as the Consumer Credit Protection Act and the Retirement Savings Account Act (12 September 2019 ).  More... 

AFCA updates Rules to name financial firms
AFCA has announced its latest Rule change allowing the authority to identify financial firms in published determinations updated and published on the AFCA website (11 September 2019).  More... 

ASIC suspends the AFS licence of Financial Options Pty Ltd
ASIC has suspended the Australian financial services (AFS) licence of Queensland-based financial services provider Financial Options Pty Ltd until 26 February 2020. The licence was suspended because ASIC was concerned that Financial Options was not meeting its obligations as an AFS licensee (10 September 2019).  More... 

ASIC extends relief for foreign financial services providers
ASIC has extended to 31 March 2020 licensing relief for foreign financial services providers to allow them to provide certain financial services to Australian wholesale clients without needing to hold an Australian financial services licence (10 September 2019).  More... 

Taking action on the Banking, Superannuation and Financial Services Royal Commission - Recommendation 2.4: Grandfathered Commissions
The Coalition Government passed legislation through the House of Representatives to end the payment of grandfathered conflicted remuneration to financial advisers. Under the Bill, conflicted remuneration paid to financial advisers will be banned from 1 January 2021 (11 September 2019).  More... 

Westpac facing class action for allegedly short-changing members
Westpac has received a class action against two of its subsidiary companies in the latest legal action against the big bank. The action relates to aspects of BTFM’s BT Super for Life cash investment option with the damages sought by the claim unspecified at the time (09 September 2019).  More... 

ATO unpaid super action welcome but 99 per cent of workers still short-changed
Moves by the Australian Tax Office to go after those employers not paying their workers super are welcome but barely scratch the surface of the problem Industry Super Australia says (09 September 2019).  More... 

In practice and courts

Does higher superannuation reduce workers’ wages?
Kyle Taylor; The McKell Institute: 16 September 2019
Despite many claims to the contrary, this paper finds there is scant empirical evidence of a causal relationship between superannuation increases and low wage growth and it suggests that increasing the Superannuation Guarantee 2.5 percentage points will give workers a share of productivity.  More...

Consultation begins on new ASIC powers
Consultation dates: 11 September 2019 - 09 October 2019
Treasury is seeking feedback on its draft legislation that would expand the supervisory powers of the ASIC. The draft legislation also strengthens ASIC's licensing powers by increasing the standards required of an Australian Financial Services Licence holder, at both the time of application and on an ongoing basis, and extends ASIC's powers so it may ban a person from performing functions in a financial services or credit business.  More... 

Corporations Amendment (Design and Distribution Obligations) Regulations 2019
Consultation dates: 12 September 2019 - 11 October 2019 - The Government has released for public consultation exposure draft regulations to support the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 and an explanatory statement.  More... 

Reminder: AFCA naming and shaming from October
The Australian Financial Complaints Authority (AFCA) has confirmed a starting date for it to name firms in its determinations, with the watchdog to start exposing perpetrators from 1 October. The rules which were approved by ASIC in August will allow AFCA to publish the names of financial firms in all determinations.  More... 

AFCA updates Rules to name financial firms
The updates to the Rules allow AFCA to name financial firms in determinations that are issued and published from 1 October 2019. The Operational Guidelines explain in more detail how AFCA will apply the Rules. See the Rules and Operational Guidelines (11 September 2019). 

FASEA releases additional practice questions
FASEA has released additional practice questions to help advisers prepare for the Exam (11 September 2019).  More...

Exposure Draft and comment letters—Amendments to IFRS 17
Comments due by 25 September 2019.  More... 

Exposure Draft and comment letters—Reference to the conceptual framework (Amendments to IFRS 3)
Comments due by 27 September 2019.  More...

Proposal to remove special purpose financial statements for certain for-profit private sector entities (AASB ED 297) – Have your say!
ED 297 Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities is proposing to remove the ability of for-profit large proprietary, unlisted public (other than companies limited by guarantee) and small foreign-controlled companies to publicly lodge special purpose financial statements (SPFS) with ASIC. Comments close 15 November 2019

ASIC consultation: New guidance for companies on whistleblower policies
ASIC is calling for public input on its proposed guidance on the new legal obligation on companies to implement a whistleblower policy, which must be made available to their officers and employees by 1 January 2020. The Proposed Regulatory Guide Whistleblower policies explain how companies can establish, implement and maintain a policy.  More... 

ASIC consultation: Foreign financial services providers relief proposals
CP 301 sets out a proposal to enable foreign providers to apply for a modified form of Australian financial services licence. This follows ASIC’s review of the regulatory settings behind our foreign providers relief. The current foreign provider licensing relief due to sunset on 27 September 2018, will be  extended until 30 September 2019 while we consult with stakeholders. ASIC has extended  licensing relief for foreign financial services providers to 31 March 2020 to allow them to provide certain financial services to Australian wholesale clients without needing to hold an Australian financial services licence (10 September 2019).  More... 

ASIC CP 300 approval and oversight of compliance schemes for financial advisers
The proposals in CP 300 Approval and oversight of compliance schemes for financial advisers have been outlined outlined, with an intention to release a regulatory guide setting out our final policy by the end of September 2010.  More... 

ASFA submissions
Submission to The Treasury - Consultation on Financial Institutions Supervisory Levies methodology.  More... 

FSC submissions
17 September 2019 - FSC SUBMISSION - Putting Members Interest First

AIST policy news - 13 September 2019
Policy News - Regulators set to “name names” on poor insurance handling;  ASIC not responsible for your ethical behaviour: Danielle Press; Seniors advocacy group joins calls for changes to Age Pension taper rate; Treasury taskforce to address regulatory barriers to infrastructure investing and  Royal Commission implementation a priority says Treasury.  More... 

AIST policy news - 19 September 2019
19 September 2019 - Coming soon.  More... 

Current AFCA matters
Sterling Group investors (Updated September 2019).

Gazette - Superannuation Industry (Supervision) Act 1993

Notice of Disqualification – Lee-Anne Tricia Schoonens; Kane Schoonens

Notice of Disqualification – Luke John Schoonens; Garry J Jaques; Sally-Ann J Robertson; Tamer Avsar

Notice of Disqualification – Ronald Peel; Tohuia Tupou; Tevita Tupou

Notice of Disqualification - Jennifer Harrison


Aslami v Board of Trustees of the State Public Sector Superannuation Scheme as Trustee for the QSuper Fund [2019] FCA 1560
SUPERANNUATION – appeal from a judgment of the Superannuation Complaints Tribunal (Tribunal) to affirm a decision of the Board of Trustees of the State Public Sector Superannuation Scheme for the QSuper Superannuation Fund to decline the appellant’s claim for a total and permanent disablement benefit – construction of the phrase “education, training or experience” – whether the Tribunal adopted the correct approach – whether the Tribunal applied the correct test – appeal dismissed
Administrative Appeals Tribunal Act 1975 (Cth); Superannuation (Resolution of Complaints) Act 1993 (Cth).

Australian Securities and Investments Commission v Gallop International Group Pty Ltd, in the matter of Gallop International Group Pty Ltd [2019] FCA 1514
CORPORATIONS –allegations that two companies contravened s 911A and s 1041H of the Corporations Act 2001 (Cth) and s 12DA and s 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) – whether the companies conducted a business in this jurisdiction without holding an Australian Financial Services Licence – where financial services business promoted on two websites accessible in this jurisdiction – where websites remained accessible following the cancellation of each company’s licence – whether conduct of uploading accessible conduct to each website was attributable to both companies – whether representations accessible on website were false or misleading in contravention of s 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) – whether continued conduct of financial services business by first defendant constituted misleading or deceptive conduct in contravention of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) and s 1041H of the Corporations Act 2001 (Cth) – contraventions established against first defendant – no contraventions established against second defendant.
CORPORATIONS – whether third defendant aided, abetted, counselled, procured or was otherwise knowingly concerned in the first defendants’ contraventions of s 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) – nature and extent of involvement – assessment of pecuniary penalty.
CORPORATIONS – whether second and fourth defendants should be wound up on just and equitable grounds where no contraventions established against them.
CORPORATIONS – whether third defendant should be disqualified from managing corporations – whether third defendant should be permanently restrained from involvement in a financial services business in this jurisdiction.
EVIDENCE – where defendants fail to appear at trial – where court satisfied the defendants are aware of the proceedings the orders sought against them – consideration of the inferences that may be drawn from the defendants’ failure to adduce evidence in respect of matters within their knowledge.
Australian Securities and Investments Commission Act 2001 (Cth) ss 5, 12AC, 12BA, 12BB, 12DA, 12DB, 12GBA, 12GD, 12GH, 12GJ, 12GLD, 19, 77
Corporations Act 2001 (Cth) ss 9, 79, 206E, 461, 462, 464, 465A, 761A, 763A, 763B, 766A, 766C, 769B, 911A, 911D, 912A, 912D, 913B, 915B, 1041H, 1317QD, 1324
Trade Practices Act 1974 (Cth) s 86, Pt VI
Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth) Schs 1, 2
Federal Court (Corporations) Rules 2000 (Cth) r 5.11.

Australian Prudential Regulation Authority v Kelaher [2019] FCA 1521
SUPERANNUATION – whether two entities and their directors contravened s 52 and s 52A of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) – trustee’s duties – duties of trustee directors – alleged contraventions of statutory covenants – care, skill and diligence – best interests of the beneficiaries – conflicts of interest – whether the governing rules of the trusts exclude liability for the alleged contraventions – prudent person and prudent superannuation trustee standards of care – inadequate proof of contraventions – application dismissed. 

Inabu Pty Ltd as trustee for the Alidas Superannuation Fund v CIMIC Group Ltd [2019] FCA 1480
CORPORATIONS – interlocutory application to strike out paragraphs of the applicant’s further amended statement of claim –– pleadings in paragraphs 33, 34, 37 and 38 insufficiently clear – whether paragraph 41 consistent with the deficiency found in Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd [2018] FCA 659 – paragraph 41 sufficiently clear – orders sought in interlocutory application made in part.

MetLife Insurance Limited v MX [2019] NSWCA 228
SUPERANNUATION – accident and sickness insurance – benefits for disablement – where benefits insured under group life policy – benefit for “total and permanent disability” – where insurer declined claim twice – where the insurer’s second decision took into account its first decision – whether insurer took into account irrelevant consideration – whether insurer in breach of its contractual duty – whether insurer acted reasonably and fairly in its consideration of the claim.  



Treasury Laws Amendment (2019 Measures No. 2) Bill 2019
Introduced HR 18/09/2019
A Bill for an Act to amend the law relating to taxation, competition, energy and superannuation, and for related purposes.

Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019
Introduced HR 18/09/2019
The Superannuation guarantee amnesty provides for a one-off amnesty to encourage employers to self‑correct historical SG non-compliance. The amendments also limit the Commissioner’s ability to remit penalties for historical SG non-compliance, where an employer fails to disclose information relevant to their historical SG shortfall.

Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019
Finally passed both Houses 19/09/2019
Amends the: Superannuation Industry (Supervision) Act 1993 to prevent trustees from providing insurance on an opt out basis to members who are under 25 years old and begin to hold a new product on or after 1 October 2019, and to members who hold products with balances below $6000; and Superannuation (Unclaimed Money and Lost Members) Act 1999 to make consequential amendments.

Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019
Senate Introduced and read a first time 12/09/2019
Amends the: Superannuation Guarantee (Administration) Act 1992 to enable certain employees with multiple employers to apply for an employer shortfall exemption certificate which prevents their employer from having a superannuation guarantee shortfall if they do not make contributions for a period; Administrative Decisions (Judicial Review) Act 1977 to make consequential amendments; Income Tax Assessment Act 1997 to ensure that a superannuation entity's non-arm's length income includes income where expenditure in gaining or producing it was not an arm's length expense; and Income Tax Assessment Act 1997, Taxation Administration Act 1953 and Income Tax (Transitional Provisions) Act 1997 to ensure that, in certain circumstances involving limited recourse borrowing arrangements, the total value of a superannuation fund's assets is taken into account in working out individual members' total superannuation balances.


ASIC Corporations (Repeal) Instrument 2019/874
18/09/2019 - This instrument repeals the ASIC [CO 09/437] (Departed former temporary residents superannuation – Disclosure relief) and ASIC [CO 09/210] (Intra-fund superannuation advice) which have become redundant and are/ or no longer necessary. 

 ASIC Corporations (Unclaimed Superannuation—Former Temporary Residents) Instrument 2019/873
18/09/2019 - This instrument continues the relief given by [CO 09/437] with a minor policy change.

ASIC Corporations (Changing Scheme Constitutions) Instrument 2019/700
12/09/2019 - This instrument continues the relief under ASIC Class Order [CO 09/552], which deals with changing the constitution of a registered scheme, with minor changes only.

ASIC Corporations (Product Intervention Order—Short Term Credit) Instrument 2019/917
12/09/2019 - This instrument prohibits the provision of short term credit except in accordance with conditions which limit the total fees that can be charged. 

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

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