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

Type Subject matter Source Description

Federal Parliament

AFCA Bill passes both Houses

Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017

On 14 February 2018, the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 passed both houses of Parliament and is now awaiting Royal Assent.

According to the associated media release from the Hon Kelly O'Dwyer MP, "the Government has decided that AFCA will start receiving disputes from no later than 1 November 2018", with a "proposal for a not-for-profit company to operate the AFCA scheme to be lodged with Treasury by 15 March 2018".

Treasury

New Bills to be debated

Treasury Laws Amendment (2018 Measures No. 1) Bill 2018

On 7 February 2018, the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018 was introduced into the House of Representatives. According to the Explanatory Memorandum, the Bill proposes to:

  • "[amend] the superannuation laws to enable the [ATO] to pay certain superannuation amounts directly to individuals with a terminal medical condition";
  • amend the Income Tax Assessment Act 1997 (Cth), the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012, and the Tax Laws Amendment (2009 Measures No. 6) Act 2010 to "extend the tax relief for merging superannuation funds until 1 July 2020";
  • amend the Australian Prudential Regulation Authority Act 1998 (Cth) to "enable the Government to recover the ongoing cost of the governance of the superannuation transaction network from the superannuation supervisory levy"; and
  • "[transfer] the regulator role for the early release of superannuation benefits on compassionate grounds from the [Department of Human Services] to the [ATO]".
Treasury Proposed taxation changes to reversionary TRIS

Exposure Draft: Reversionary Transition to Retirement Income Streams

On 12 February 2018, the Treasury released draft legislation in relation to the reversion of the transition to retirement income streams (TRIS) to dependant beneficiaries. The Exposure Draft proposes to amend sub-section 307-80(3)(a) of the Income Tax Assessment Act 1997 to "ensure that reversionary transition to retirement income streams can be paid to dependant beneficiaries, irrespective of whether they satisfy a condition of release".

As the law currently stands, a reversionary TRIS will cease upon the death of the primary holder unless "the dependant beneficiary satisfies a condition of release before the benefits are paid". Treasury has acknowledged that the "inability for a TRIS to automatically revert where the dependant has not met a condition of release has resulted in administrative difficulties for funds".

Submissions to the exposure draft close on 23 February 2018.

Royal Commission First public hearing in Melbourne

Transcript for 12 February 2018

On 12 February 2018, the initial public hearing for the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry was held in Melbourne. Commissioner Kenneth Hayne QC and Rowena Orr SC made initial statements as to the background of the enquiry, focusing on the following themes:

  • Schedule: the first round of hearings will commence in one month. The first round of hearings will consider whether consumers are being "treated honestly and fairly" in the context of a number of credit products such as home loans, car loans, and credit cards. Another area of focus will be the "financial planning and wealth management industry". Ms Orr noted that this "presents an important opportunity to evaluate the success of [the Future of Financial Advice] reforms and inquire into the practices of the financial advisory industry".
  • Appearance at a hearing: the Commission has published Practice Guideline 3 in relation to appearing at a hearing. A person or entity who wishes to appear at a round of public hearings "will need to demonstrate a direct or substantial interest in the hearing of a case study or subject of inquiry."
  • Settlement deeds: Commissioner Hayne referred to section 6M of the Royal Commissions Act 1902 and reiterated that in the context of a settlement with a financial services entity, "a confidentiality or non-disparagement clause in an agreement will not act as a reasonable excuse against production in answer to a notice to produce or a summons. It would not be a reasonable excuse not to answer a question in a hearing."
  • Consumer submissions: an online form was released on 22 January 2018, directed at members of the public who would like to put forth submissions. Since its release, more than 385 submissions have been received. Of the responses received to date, approximately 49% relate to banking, 18% to superannuation, 6% relate to the general insurance market, and 6% relate to the life insurance and total permanent disability insurance market.
  • Research Papers: the Commission will produce a series of research papers which will be released over the course of the year. The first of these, entitled Features of the Australian Banking Industry: Background Paper Number 1, was released last week.