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‘BEAR’ morphs to ‘FAR’
Treasury this week released a consultation paper outlining the draft Financial Accountability Regime (FAR), which extends the Banking Executive Accountability Regime (BEAR) to the wider financial industry.
Treasury’s proposal paper outlines recommended obligations for financial entities, including APRA-regulated superannuation funds, under a renamed Financial Accountability Regime (FAR).
Like BEAR, FAR will impose compliance obligations related to:
Funds will be required to defer 40% of variable remuneration for accountable persons for at least four years if the deferred amount is greater than $50,000.
Under the new measures, APRA will be able to veto the appointment or reappointment of senior executives and directors where it believes a person is not suitable to hold a position.
RSE licensees with more than $10 billion in assets will be designated as ‘enhanced compliance entities’ and will be required to meet all aspects of the FAR. RSE licensees below the $10 billion threshold will be classified as ‘core compliance entities’ and will not be required to submit accountability maps and statements to APRA and ASIC.
An implementation date has not yet been proposed.
Submissions close 14 February. AIST will be drafting and consulting on a submission.
For further information, please contact AIST’s Senior Governance Manager, Holly Lindsay by email: email@example.com
Government seeks to expand consumer data right applications
The Government will undertake an inquiry into the newly legislated Consumer Data Right (CDR) regime to assess whether CDR can further increase competition.
The Consumer Data Right regime provides members with access to their personal information, giving them the ability to instruct businesses to provide safe and secure access of their data to trusted third parties.
In a related submission to a Senate Committee inquiry into FinTech and RegTech and a recent media article, AIST supported the use of CDR in allowing members to share relevant information with their super funds.
However, AIST emphasises the need for including customer protection, an even playing field, simple language and adequate consultation on CDR’s rollout.
The review will report by September 2020. An Issues Paper will be made available in early 2020 for interested parties to provide input.
Choice of fund shouldn’t trump member outcomes: AIST
AIST has warned that the Government’s bill to extend member choice of fund laws could result in some members having lower retirement outcomes.
The Treasury Laws Amendment (Your Super, Your Choice) Bill 2019 seeks to stop employers from restricting the choice of superannuation funds for employees under workplace determinations or enterprise agreements.
AIST’s submission supports the principle of choice in superannuation but highlights that members in the choice segment are at risk of having materially lower retirement incomes.
Our submission cites Productivity Commission data showing that 36% of the choice products sampled underperformed their benchmark.
Additionally, an ASIC submission to the Financial Services Inquiry in 2014 found that more choice does not improve member engagement.
Due to a proliferation of choice products, the proposed legislation to enforce choice in employment agreements does not protect members with measures that ensure the most beneficial product is offered.
AIST has proposed that the existing exemption remain for enterprise agreements where superannuation benefits in excess of the community standard are negotiated between the employer and their employees.
For further information, please contact AIST’s Policy Analyst, Zach Tung at firstname.lastname@example.org
APRA to implement RegTech in data collection
APRA is seeking to implement RegTech within its own data collection systems for superannuation in a bid to improve efficiency and accessibility.
In its submission to the Senate Committee examining Financial Technology and Regulatory Technology, APRA is broadly supportive of the grow of Fintech and RegTech industries, recognising that RegTech in particular could benefit its own operations.
APRA notes that RegTech is likely to play an increasing role in the collection of superannuation data by automating regular reporting tasks and coping with increased granularity of data.
APRA’s plans for Heatmap benchmarking across both MySuper and Choice products will see its collection of data from super funds expand dramatically.
APRA 2019 Year in Review
APRA has published a Year in Review document to report on the actions and decisions taken over the past year to fulfil its mandate.
The Year in Review covers the operating environment post-FSRC, APRA’s Member Outcomes Act and capability review, as well as APRA’s cross-industry and internal initiatives.
The review provides a snapshot of superannuation data regarding the growth of its regulated entities over the past five and ten years in terms of assets, asset allocation, average annualised rate of returns and administration and operation expense ratios.
Key developments covered include APRA’s performance heatmap, the superannuation data transformation, and legislative changes regarding the PYS and PMIF Acts.
“2019 saw a significant recalibration of APRA’s focus and breadth of responsibilities. Yet as busy as 2019 was, there will no doubt be further challenges in store for 2020”, said APRA Chair, Wayne Byers.
24 January 2020