The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
|Superannuation trustee governance – APRA outlines expectations||
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:
|Fee and cost disclosure regime||
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:
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||
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:
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||
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:
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||
On 20 October 2017, the High Court of Australia granted special leave for the appeal of Miles v SAS Trustee Corporation  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.