The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
|APRA statement to Senate Committee hearing on superannuation bills||
On 10 October 2017, Deputy Chairperson of APRA, Helen Rowell, delivered an opening statement to the Senate Standing Committee on Economics' public hearing in relation to three superannuation bills currently before the Senate.
In relation to APRA's enhanced supervisory powers in the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017, Ms Rowell noted that "APRA is [currently] limited to taking action where a trustee has already breached the law" and "where APRA identifies a specific prudential concern, this proposed power will enable APRA to intervene at an earlier stage, with a wider range of options".
Also in relation to this Bill, Ms Rowell commended the proposed MySuper product outcomes assessment as a "positive initiative" which should be "undertaken by trustees beyond MySuper products".
In relation to the independent director requirements in the Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017, Ms Rowell noted that "APRA sees little downside to an additional injection of independence" as this change will ensure that "there is adequate objectivity and challenge in decision-making, and more effective conflict management".
Case law update
On 25 September 2017, the NSW Supreme Court considered MetLife Insurance Ltd's (Insurer) decision regarding the plaintiff's claim for a total and permanent disablement (TPD) benefit from a superannuation fund. The trustee of the fund held two group life policies with the Insurer.
The plaintiff was formerly a member of the NSW Police Force but retired after developing Post Traumatic Stress Disorder and Major Depressive Disorder. She ceased work and lodged a TPD claim. The TPD definition in the each policy was relevantly identical - i.e., that the insured member was "unlikely to ever engage in any gainful profession, trade or occupation for which the Insured Member is reasonably qualified by reason of education, training or experience".
The Insurer declined the claim on the basis that the plaintiff participated in ordinary daily activities, was able to attend social events (as observed on her Facebook page) and this contradicted reports provided by medical professionals. In addition, there was evidence that the plaintiff was trained to work in vocations which were "far removed" from policing.
The Court held that it was not reasonable for the Insurer to reach its own conclusion that the member was active in her daily living based on her Facebook posts which made her "appear happy" and able to socialise with a limited group of friends.
The Court determined that it was "not realistic to expect that a psychologically incapacitated person who cannot be relied upon to get out of bed in the morning, or to properly dress herself, or to communicate naturally with supervisors, co-workers, and the public, will ever be employable in any real way".
Accordingly, the Court found that the plaintiff satisfied the definition of TPD under the relevant policies and was entitled to a TPD benefit.
|Legislative update||Senate Report into AFCA Bill||
On 17 October 2017, the Senate Economics Legislation Committee (Committee) released its report into the Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Bill 2017 (Bill).
The Committee recommended that the Bill be passed, but noted that the transition team responsible for implementing the new dispute resolution scheme should be aware of a number of industry concerns.
|SCT annual report||SCT 2016/2017 Financial Year Annual Report||
On 16 October 2017, the 2016-17 Annual Report of the SCT was tabled in Parliament. According to the report "the Tribunal handled 17% more complaints and complex enquiries" in the 2016/17 financial year, but the number of complaints finalised and the average number of SCT staff both decreased by 9%.
|Treasury update||Issue and distribution of financial products - new obligations||
On 13 October 2017, Minister for Revenue and Financial Services, the Honourable Kelly O'Dwyer, addressed the Association of Financial Advisers at the 2017 National Adviser Conference, highlighting the introduction of new obligations around issuing and distributing financial products and new ASIC powers.
Ms O'Dwyer stated that "product issuers and distributors should be required to target the distribution of their products" and ensure that "they are not inappropriately marketed to those consumers for which they would be unsuitable."
Ms O'Dwyer also indicated that ASIC "should be empowered to step in to protect consumers, through a product intervention power" where risky and unsuitable products are on the market. This would see ASIC intervene by "amending product marketing and disclosure materials", "imposing consumer warnings and labelling changes", "restricting how a product is distributed", and "banning products, if the circumstances require it".