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Early release update
More than 2.7 million Australians have now applied for early release according to APRA’s latest data (up until the week ending 5 July).
The amount of super withdrawn from the system is now more than $29 billion, overtaking the Government’s initial estimate of how much super would be released through its COVID early release scheme.
The latest APRA data includes the end of the period for which members could apply for up to $10,000 for the 2019/20 financial year and the start of the period for which members could apply for up to $10,000 for the 2020/21 financial year.
A surge of more than half a million applications during the week from 29 June to 5 July includes a mix of applications received in both the 2019/20 and 2020/21 financial years. It is a significant increase in applications compared to the week of 22 June to 28 June, where 127,000 applications were received by funds, reflecting the start of repeat applications in the 2020/21 financial year.
The data shows that 346,000 members have so far applied to the scheme for the second time. The average amount applied for by those making a repeat application was $8,904, quite a bit higher than the average amount withdrawn in the first round of the scheme of about $7500.
ASIC updates advice on insurance communications to members impacted by early release
ASIC has updated its advice on member communication on insurance where balances have been reduced by the COVID early release scheme.
In the update, ASIC notes that it is incorrect to simply state that an account with a balance that falls below $6,000, including due to early release, may or will lose insurance because of the Putting Members’ Interests First (PMIF) and Protecting Your Super Package (PYSP) measures.
If a member’s account balance falls below $6,000, the PMIF and PYSP measures do not:
Member funds encouraged to complete vulnerable members survey
In order to shed light on industry approaches to assisting vulnerable members, the member funds of AIST, ASFA and the FSC have been asked to complete a survey to provide information about how the industry is addressing vulnerable member issues.
The Insurance in Super Voluntary Code of Practice requires funds to have policies to help vulnerable members, and the development of these policies are part of Code transition plans.
To address this, code owners are surveying the industry to better understand:
The survey, emailed to the member funds of AIST, is due to be completed on Friday, 24 July. AIST encourages our members to complete the survey as soon as possible.
AIST has recognised that the needs of vulnerable members can be addressed by specific policies and practical steps and governed by overall principles.
ASIC has also made it clear that protecting vulnerable consumers is a regulatory priority, and recommend that:
The Code-owners and the Code Review Committee have decided to address these as a priority and have established a vulnerable member working group involving representatives from across the superannuation and insurance industry.
As subscribers to the Insurance in Super Voluntary Code of Practice (and as the industry associations that own the Code), we all have a common interest in addressing and improving the special insurance needs of vulnerable members.
If you have any questions about the survey or the work being undertaken in relation to the Code, please contact David Haynes, AIST email@example.com.
Change to monetary threshold in the legal definition of ‘consumer’
Regulations to raise the monetary threshold that applies to the legal definition of ‘consumer’ will come into effect next year.
The regulations give effect to proposal 15 of the Australian Consumer Law Review (ACL Review) which recommended changing the monetary threshold in the definition of ‘consumer’ for the purposes of the Australian Consumer Law (ACL).
The current definition of ‘consumer’ captures both:
The changes will increase the monetary threshold in the definition of ‘consumer’ from $40,000 to $100,000 and is intended to provide further protections for business purchases. The monetary threshold of $40,000 in the definition of ‘consumer’ has not changed since the threshold was increased from $15,000 in 1986 and has therefore declined in ‘real’ terms.
Given that ASIC administers the Australian Consumer Law as it applies to the supply of credit and financial services, the Regulations also amend the Australian Securities and Investments Commission Regulations 2001 (ASIC Regulations) which contain mirror consumer protection provisions for financial products and services.
The primary protections for consumers of financial services under the ASIC Act are:
The changes come into effect 1 July 2021.
APRA provides clarity on investment option reporting
Responding to queries from AIST member funds, APRA has clarified how trustees should approach reporting at the investment option level.
Some trustees were confused with APRA’s wording in relation to “where an investment option was developed by the RSE Licensee”. APRA have clarified that correct interpretation is that where all investment options have been developed by the RSE Licensee it is correct to report that all assets as internally managed.
For a further explanation please click this link.
16 July 2020