Welcome to the latest issue of the KHQ Super Alert. This week ASIC and APRA published speeches delivered by key representatives in relation to some of their focus areas this year: scam risk for ASIC and AI testing for APRA. ASIC also published some additional guidance for financial adviser registration requirements.
ASIC – Scam risk is current focus of regulatory reviews
On 23 May 2024, ASIC published a speech delivered by Commissioner Alan Kirkland. The focus of the speech was about changing trends in the global environment and how that is shaping ASIC’s priorities. In particular, Mr Kirkland mentioned investment scams affecting Australians and ASIC’s ‘further surveillance project underway…to examine the responses [to scam risk] of a range of…banks and superannuation funds’. ASIC’s findings about the ‘prevention, detection and response’ to scam risk by these entities ‘will be published later in the year’.
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APRA – Testing AI in regulated entities
On 22 May 2024, APRA published a speech delivered by APRA Member Therese McCarthy Hockey. The focus of Ms McCarthy Hockey’s speech was ‘navigating the new challenges posed by generative artificial intelligence’. In relation to superannuation specifically, the following comments were made:
- ‘[c]onsidering the potential for cost efficiencies and service improvements, it’s no surprise the business world is heavily invested in efforts to harness the technology’;
- ‘[t]echnological advancements through AI could deliver faster and more personally tailored customer service or make quality financial advice available at lower cost. If a superannuation fund is able to harness AI to better predict market trends, that could mean increased returns for its members’;
- the Federal Government ‘is taking the lead on coordinating a national approach to developing guardrails on the use of AI across all aspects of society’; and
- ‘not all…superannuation trustees are…capable of’ starting ‘to test how they can incorporate AI into their practices’. So only those ‘entities with robust technology platforms and a strong track record of risk management are good candidates to experiment with AI and should feel confident proceeding’.
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ASIC – Guidance about ‘experienced provider pathway’ for advisers
On 22 May 2024, ASIC issued a media release announcing that it has published Information Sheet 281 FAQs: Relevant providers – Accessing the experienced provider pathway. The purpose of this guidance is to provide information about the ‘experienced provider pathway’ for advisers who are ‘deemed as having met the qualifications and professional year standards without needing to undertake further education and training if they have…at least 10 years’ (cumulative) experience as an authorised financial adviser…[and] a clean disciplinary record’. Advisers ‘who seek to rely on this pathway need to make a declaration’ and licensees will need to notify ASIC if they have received such a declaration (from 1 July 2024).
Click here for details.
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