Superannuation Alert 03.11.17

- 3 November 2017

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

Type Subject matter Source Description

APRA

Superannuation trustee governance – APRA outlines expectations

APRA Deputy Chairman speech to the AIST 25 October 2017

On 25 October 2017, APRA's Deputy Chairman, Helen Rowell, delivered a speech to the Australian Institution Superannuation Trustees (AIST) on the "key elements of better practice governance that APRA would like to see adopted across the superannuation industry".

In highlighting APRA's perspectives on what has changed and noting steps for improvement, Deputy Chairman Rowell identified the following areas for opportunity and growth:

  • "a clearly articulated view of the optimal board composition";
  • "a director selection process that provides a clear role for the board (and not just nominating bodies) in the appointment of candidates"; 
  • "sound renewal and succession planning processes, that include an approach to tenure limits and reappointment that strikes an appropriate balance between ensuring continuity and bringing diversity and fresh perspectives"; and 
  • "a robust and objective board assessment process, that considers the performance of the board as a whole as well as individual directors."

ASIC

Fee and cost disclosure regime

ASIC Media Release

On 1 November 2017, ASIC issued a media release stating that it is "committed to improving the transparency and comparability of fees and costs for managed investment and superannuation funds". ASIC announced that:

  • it "has extended beyond 30 September its facilitative compliance approach to fee and cost disclosure"; and
  • it "will work with an external expert to conduct a review of the fees and costs disclosure under RG97 to ensure that it is best meeting in practice the objective of greater transparency".

The expert review in relation to the RG97 reforms is anticipated to be concluded in the first half of 2018.

Case law update FOFA best interest duty: civil penalty of $1m imposed

Australian Securities and Investments Commission, in the matter of Golden Financial Group Pty Ltd (formerly NSG Services Pty Ltd) v Golden Financial Group Pty Ltd (No 2) [2017] FCA 1267

On 27 October 2017, the Federal Court of Australia imposed a civil penalties against NSG Services Pty Ltd (NSG) (currently named Golden Financial Group Pty Ltd) for a breach of the best interests duty introduced under the Future of Financial Advice (FOFA) reforms.

On 30 March 2017, the Court made declarations by consent that NSG had breached its best interests duty by reason of the following inadequate practices and polices: new client advice processes; training of representatives; systems for monitoring and supervising representatives; external audits; compliance policies and sales targets and remuneration.

In this further hearing, the court ordered that NSG pay a pecuniary penalty in the following amounts:

  • $750,000 in respect of contraventions of section 961L of the Corporations Act; and
  • $250,000 in respect of the contraventions of section 961K(2) of the Corporations Act.

In addition, NSG was ordered to pay $50,000 in costs to ASIC and an additional $50,000 towards the costs of its investigation into NSG.

This is the first time a civil penalty has been imposed on a financial service licensee for breaches of the FOFA best interest duty. In respect of this NSG's actions, the Court commented that the contraventions of the Corporations Act were "very serious, and warrant the imposition of a substantial penalty".

Case law update Superannuation guarantee scheme: proper claim for superannuation guarantee payments

Oze-Igiehon v Uber Technology Inc [2017] FCA 1024

On 31 August 2017, the Federal Court of Australia handed down its judgment in relation to the failure of Uber Australia Pty Ltd (Uber) to pay superannuation guarantee contributions under the Superannuation Guarantee (Administration) Act 1994 (SGA Act).

The applicant's originating application, sought the following relief:

  • "an injunctive order for Uber to pay superannuation to current Uber drivers pursuant to ss [sections] 12 and 16 of the SGA Act;"
  • "an injunctive order for Uber to pay outstanding superannuation to previous Uber drivers who no longer work for Uber pursuant to ss [sections] 12 and 15B of the SGA Act;" and
  • "a declaratory order that Uber drivers and Raiser Operations BV are in an employee-employer relationship in Australia."

Uber sought an order that the proceedings be dismissed with costs.

In relation to the first two claims, the Court found that the applicant did not have standing. The Court stated that "no employee is entitled to seek recovery of any superannuation shortfall from their employer for an alleged breach of s [section] 16 of the SGA Act." The Court found that the superannuation guarantee shortfall is "payable as a debt to the Commissioner and the Commissioner is the one that has standing to recover that debt."

In relation to the third claim, the applicant conceded that he was not an employee. The Court held that even if he were an employee of Uber, "it would avail him nothing".

Accordingly, the court granted Uber's application and ordered that the proceedings against it be dismissed with costs.

Case law update Total and Permanent Disablement (TPD) case appealed to High Court

SAS Trustee Corporation v Miles [2017] HCATrans 208 (20 October 2017)

On 20 October 2017, the High Court of Australia granted special leave for the appeal of Miles v SAS Trustee Corporation [2017] NSWCA 86.

The facts of the case are that the respondent (Mr Miles) was medically discharged in 2003 when the Commissioner of Police certified that he had suffered a spinal injury on duty. As a result of being "hurt on duty" Mr Miles received a superannuation allowance pursuant to s [section] 10(1A) of the Police Regulation (Superannuation) Act 1906 (NSW) (Superannuation Act) of 82.55 per cent of his “attributed salary of office.”

Mr Miles then made a second application to increase his superannuation allowance to 85 per cent, pursuant to section 10(1A)(b) of the Superannuation Act which was rejected by the trustee. A majority of the NSW Court of Appeal ruled that the superannuation allowance should be raised to 85% due to post-traumatic stress disorder, even though that disorder arose after the officer left the police. The trustee has been granted special leave to appeal that decision.

  

Further information

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.