Welcome to the latest issue of the KHQ Super Alert. This week APRA released the final version of the guidance to accompany CPS 230 and Treasury commenced public consultation in relation to the first set of financial advice regulations.
APRA – Final version of CPG 230 released
On 13 June 2024, APRA published the final version of CPG 230 Operational Risk Management. The related prudential standard, CPS 230 Operational Risk Management will come into effect on 1 July 2025. As referred to in our Super Alert of 21 July 2023, the draft version of CPG 230 was available for public consultation.
According to APRA, the following changes have been made to CPG 230 compared to the first draft that was released:
- ‘the guidance has been shortened and is more tightly focused on how to meet expectations set by the standard’;
- ‘entities that are classified as non-Significant Financial Institutions have an additional 12 months to comply with certain requirements in CPS 230 relating to business continuity and scenario analysis’;
- ‘a “day one” checklist [is included] for entities to assist in their implementation of CPS 230’; and
- ‘APRA has provided a three-year forward plan of its intended approach to supervising CPS 230 to assist industry with implementation and planning’.
Click here for details.
Federal Court – Decision about death benefit nominations and end of relationship
On 13 June 2024, the Federal Court delivered its judgment in Nguyen v Australian Financial Complaints Authority [2024] FCAFC 77. This matter was an appeal of a Federal Court decision which concerned a non-lapsing binding nomination in favour of a de facto spouse (beneficiary), but there was some dispute as to whether the relationship had been terminated by virtue of a text message sent by the deceased just prior to his death by suicide.
In the initial AFCA determination, AFCA found that the beneficiary remained the spouse and therefore was entitled to 100% of the death benefit. That decision was appealed on a question of law (essentially concerning whether the text message should be construed to have effected a termination of the relationship), and the primary judge allowed the appeal. On further appeal to the Full Federal Court, the appeal was upheld thereby restoring the trustee’s original decision to pay 100% to the beneficiary.
Snaden J said that ‘the appeal turns upon consideration of a single question, namely whether the learned primary judge was correct to discern an error of law in AFCA’s conclusion that [the beneficiary] remained [the deceased’s] spouse at the time of the latter’s death. If it was open to AFCA so to conclude, then it will necessarily follow that his Honour erred by holding otherwise and the appeal should succeed. If it was not, then his Honour’s conclusion was correct and the appeal should fail’. His Honour held that it was open to AFCA to conclude that (despite the text message indicating an intention), the deceased had not actually taken steps to end his relationship with the beneficiary prior to his death.
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Treasury – Draft regulations released in relation to financial advice changes
On 11 June 2024, Treasury released the Treasury Laws Amendment (Delivering Better Financial Outcomes) Regulations 2024 for public consultation. The regulations propose ‘to support the implementation of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 … and delivery of the first tranche of the government’s response to the Quality of Advice Review’ (the Bill is currently before the House of Representatives).
According to Treasury, the purpose of the regulations is to:
- ‘support written information or documentation requirements for the purposes of section 99FA of the [SIS Act] to continue to be met electronically’;
- ‘align requirements for Financial Services Guides’; and
- ‘streamline the regulations for conflicted remuneration’.
The consultation period closes on 8 July 2024.
Click here for details.
Legislation – APRA instrument registered about publication of superannuation data
On 7 June 2024, the Australian Prudential Regulation Authority (confidentiality) determination No. 1 of 2024 was registered on the Federal Register of Legislation. According to the Explanatory Statement, the purpose of the Instrument is to set out which ‘information provided to APRA under specified reporting standards by financial sector entities, is not confidential’. The list of non-confidential information includes various types of data reported under superannuation reporting standards. As referred to in our Super Alert of 13 October 2023, APRA consulted on the confidentiality proposals late last year.
Click here for details.
APRA – FAQs for Your Future, Your Super updated
On 7 June 2024, APRA made several updates to its frequently asked questions in relation to the Government’s ‘Your Future, Your Super’ reforms. Answers are now included for the following new questions:
- ‘Can Separately Managed Accounts (SMAs) be Trustee Directed Products (TDPs)?’;
- ‘What were the benchmark representative administration fees and expenses (‘BRAFE’) for the 12 months to March 2024?’; and
- ‘When should an RSE licensee report a benchmark allocation to the ‘Currency Exposure’ strategic sector or a currency hedging ratio to internationally domiciled strategic sectors?’
Answers to the following questions were updated:
- ‘How do trustees determine which investment options offered to members are Trustee Directed Products (TDPs) for the Performance Test?’; and
- ‘Will the Performance Test use the data collected as part of the Superannuation Data Transformation (SDT) Project?’.
Click here for details.
Legislation – Amended SRS 101 registered
On 5 June 2024, the Financial Sector (Collection of Data) (reporting standard) determination No. 10 of 2024 was registered on the Federal Register of Legislation. The purpose of the instrument is to replace existing Reporting Standard SRS 101.0 Definitions for Superannuation Data Collections with a new version of the standard. According to the associated Explanatory Statement, ‘APRA has updated the definition for the term ‘promoter (service provider type)’ and included a new definition for the term ‘promoter agreement’ for superannuation reporting’.
Click here for details.
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