Superannuation Alert 15.04.16
Financial Services eBulletin - 15 April 2016
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 7 April 2016, the Government released the Exposure Draft of Corporations Amendment (Life Insurance Remuneration Arrangements) Regulation 2016 which aims to support the Government's life insurance reform package to better align the interests of financial firms with consumers. According to the Explanatory Statement, the regulations intend to support the reform package introduced by the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2016 by:
- providing a 12-month transition period during which stamp duty relating to death benefits may be included in the calculation of commissions, while the industry makes necessary system changes to exclude it in the future;
- prescribing certain limited circumstances under which 'clawback' arrangements are not intended to apply, such as in the case of self-harm by the insured, or where a premium is reduced due to a decision by the insured to quit smoking; and
- providing for the grandfathering of existing employee-employer remuneration arrangements in a manner broadly consistent with that under the Future of Financial Advice reforms.
The closing date for submissions is 28 April 2016.
- On 8 April 2016, APRA released its investigative report into the failure of Trio Capital Limited (Trio). APRA states the report provides a summary of the collapse, and an overview of APRA's regulatory actions afterwards. Whilst the investigation concerned six related-party investments which led to $150m to be lost or irrecoverable, it saw the removal of 13 former Trio directors from the superannuation industry by APRA. Additionally APRA wrote to trustees outlining the lessons learnt from this investigation. APRA attributed the major investment losses in this collapse to:
- inadequate investment governance processes;
- failure to adequately manage dealings with related parties conflicts of interests; and
- failure to have adequate controls to mitigate fraud-related investment risk.
APRA did note there had been significant regulatory and statutory changes relating to trustee and director duties and prudential standards in the superannuation industry since this event.
- On 13 April 2016, the ATO issued a media release that it had withdrawn Superannuation Contributions Determination SCD 2004/5. This Determination was relevant to determining the first formula in section 5(1) of the Superannuation Contributions Tax Imposition Act 1997 for the 2004-2005 financial year. The Determination has been withdrawn as its date of effect has ceased. The Determination will be binding on the Commissioner for the relevant period.
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