Publication
Challenges to the validity of local council levies
The way that local councils issue special levies, and deal with errors made in the passing of those levies, has come under spotlight in the recent High Court of Australia decision.
Australia | Publication | April 2021
This article was co-authored with Caterina Presutti.
March 2021 has seen the release of legislative reforms to advice fee consent and lack of independence disclosure by financial advisers. ASIC has clarified its position on virtual AGMs and released an interim report on competition in the managed funds industry. APRA has urged life insurers and superannuation funds to ensure their insurance offerings and benefits are sustainably designed and priced to avoid volatility in insurance premiums.
On 2 March, APRA released its Quarterly Superannuation Performance publication and Quarterly MySuper Statistics report. The data presented in these publications was current as at 31 December 2020.
The publications show that superannuation assets totalled $3.0 trillion at the end of the December 2020 quarter. There was a 2.2 per cent increase in the value of total superannuation assets over the 12 months to 31 December 2020.
Total contributions increased 1.9 per cent over the year to 31 December 2020. Whilst annual member contributions of $22.9 billion were 6.4 per cent lower than the previous year, employer contributions remained resilient and increased by 4.1 per cent.
Benefit payments for the December 2020 quarter of $21.3 billion were significantly lower than the $33.9 billion paid during the prior quarter as member demand for Early Release Scheme (ERS) payments diminished. Consequently, net contribution flows were positive for the quarter ($8.3 billion) and were $7.7 billion for the year.
A summary of key statistics can be found here, and the full publications can be found here.
On 9 March, APRA issued a letter to life insurers and registrable superannuation entity (RSE) licensees urging them to address concerning trends and practices in the provision of insurance to superannuation members. APRA has noted significant deterioration in group life insurance claims experience in 2019 and 2020, and expressed concern that insurance premiums may become volatile.
APRA expects life insurers and superannuation funds to ensure that insurance offerings and benefits are sustainably designed and priced, provide appropriate value for members, and adequately reflect the underlying risks.
APRA has identified the need for:
The letter can be found here.
On 25 March, APRA released the response paper and final reporting standards for Phase 1 of its multi-year Superannuation Data Transformation (SDT), which aims to support improved member outcomes by increasing the breadth, depth and quality of APRA’s superannuation data collection.
SDT involves three phases:
Following several months of industry consultation, APRA today released a response paper and 10 finalised new reporting standards covering RSE structure and profile, performance, member demographics, expense management, asset allocation, insurance arrangements, and fees and costs.
The bulk of the new data will be submitted from September 2021, however APRA has amended the implementation timeframe in response to industry feedback to allow trustees to defer submission of some less critical data for a year.
Consultation on Phase 2 is due to commence in late 2021. More information can be found here.
On 4 March, ASIC published its final 2019-20 Cost Recovery Implementation Statement, incorporating feedback from consultation on the draft document published in June 2020. A copy can be found here.
ASIC has also published a summary of its actual regulatory costs and actual levies which will be recovered from each industry sector. Levy invoices will be issued shortly. A link to these summaries can be found here.
The Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination No. 3) expired on 21 March 2021. Determination No. 3 operated to facilitate the holding of meetings (including AGMs) by temporarily removing legal uncertainty around the validity of virtual meetings. The Government has proposed to extend Determination No. 3, with the Bill being passed by the House of Representatives on 17 March 2021.
In response to the expiration of Determination No. 3, ASIC has adopted a temporary “no action” response in relation to the convening and holding of virtual meetings to provide the market with a degree of certainty. This will:
ASIC’s position in relation to virtual meetings using virtual technology applies to meetings held between 21 March 2201 and the earlier of:
The position relating to the two month deferral to hold AGMs applies to entities with financial years ending up to 7 April 2021.
More information can be found here.
On 29 March, ASIC’s product intervention order imposing conditions on the issue and distribution of CFDs to retail clients came into effect. This order was issued on 23 October 2020 following ASIC’s Consultation Paper 322 on ‘Product intervention: OTC binary options and CFDs’ released in August 2019.
ASIC’s order reduces CFD leverage available to retail clients and targets CFD product features and sales practices that amplify retail clients’ CFD losses, such as providing inducements to become a client or to trade. It also brings Australian practice into line with protections in force in comparable markets elsewhere.
The maximum CFD leverage available to retail clients will range from 30:1 to a 2:1, depending on the underlying asset class. Before now, a retail investor’s CFD exposure could be as much as 500 times their original outlay.
The maximum penalty for a contravention of a product intervention order is five years’ imprisonment for individuals and substantial pecuniary penalties of up to $555 million for corporations.
If a court finds that a person has contravened a product intervention order, a retail client may recover the amount of loss or damage suffered because of the contravention.
This order will remain in force for 18 months, after which it may be extended or made permanent.
For more information on the order please follow this link.
ASIC has made three legislative instruments that deal with advice fee consents and independence disclosure following Royal Assent of the Financial Sector Reform (Hayne Royal Commission Response No.2) Act 2021 (the Act) earlier this month.
The Act provides for ASIC to make legislative instruments setting the requirements for:
ASIC has published examples of written consent forms which can be found here.
ASIC has commissioned the preparation of a report on the competitiveness of the Australian funds management industry. ASIC intends to review the report and its underlying research to determine the effectiveness of competition and the extent to which it is producing positive consumer outcomes.
ASIC’s review covers retail managed funds, platforms, managed discretionary accounts, listed investment companies, wholesale managed funds, segregated accounts and control of costs emerging from supporting suppliers along the value chain. The review does not include superannuation. The terms of reference of the review can be found here.
The final report is expected to be presented to ASIC in June 2021. An interim report has been published by Deloitte and can be accessed here.
Treasury has released an exposure draft of regulation amendments that support the breach reporting rules in Schedule 11 of the Financial Sector (Hayne Royal Commission Response) Act 2020 (the Act). The regulations amend the Corporations Regulations 2001, the National Consumer Credit Protection Regulations 2010, the Corporations (Fees) Regulations 2001 and the National Consumer Credit Protection (Fees) Regulations 2010 to:
Submissions on the draft regulation amendments closed on 9 April 2021.
The regulations are proposed to commence on 1 October 2021, in line with the commencement of Schedule 11 to the Act. However, the former breach reporting regime will continue to have some application on and after 1 October 2021.
More information on the exposure draft is available here.
ASIC is seeking stakeholder feedback on the forthcoming deferred sales model for add-on insurance commencing on 5 October 2021. Arising from recommendation 4.3 of the Hayne Royal Commission, the proposed model introduces a mandatory four-day pause between the sale of a principle product or service and the sale of an add-on insurance product.
ASIC is inviting feedback on:
At this stage, it is expected that ASIC will only provide exemptions to an add-on insurance product in exceptional circumstances and where it would be inappropriate to provide an industry-wide class exemption for the product or class of products.
Consultation is open until 23 April 2021.
Publication
The way that local councils issue special levies, and deal with errors made in the passing of those levies, has come under spotlight in the recent High Court of Australia decision.
Publication
On 22 February 2024, Belgium became the EU frontrunner in the fight against ecocides by being the first EU member state to criminalise ecocide, in the new Belgian Criminal Code.
Publication
The Pensions Regulator’s General Code has arrived and will apply from March 27, 2024. In this briefing, we take a step back from the detail. We set out why the General Code really matters and how pension scheme trustees can best make it work for them.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023