The month of February saw ASIC and APRA outlining their plans for the year ahead. ASIC announced that it would be expanding its enforcement focus areas in 2023 and published a timeline for regulatory developments. It also released its first Indigenous Financial Services Framework, which was a landmark document for the regulator. APRA released its supervision and policy priorities for the upcoming year and released key statistics from 2022. The superannuation industry was rocked in February by various announcements coming out of Treasury, not least the proposed legislative objective for superannuation. The month also saw AUSTRAC sign a memorandum of understanding with the UK Financial Conduct Authority in February to strengthen regulatory collaboration to tackle financial crime.
1 Treasury releases a draft legislative objective for superannuation
On 20 February 2023, the Federal Treasury announced its intention to legislate an objective for the superannuation regime, which is principally implemented via the Superannuation Industry (Supervision) Act 1993 (Cth). While the Act provides an objective for the regulators of super funds, it stops short of providing an objective for the funds themselves.
Treasury proposed to enshrine the purpose of superannuation as ‘preserv[ing] savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.’
This purpose has sparked much commentary and debate about the desired role of superannuation in society and parties have until 31 March 2023 to comment on the proposed purpose.
The media release can be accessed here and the consultation paper can be accessed here.
2 ASIC calls for annual reports to contain better material business risk disclosure
On 10 February 2023, ASIC re-stated the importance of ensuring that material business risks are properly disclosed in annual reports in order to improve transparency for current and potential investors, as well as shareholders.
ASIC is conducting a risk-based review of a selection of annual reports to ensure regulated entities are adequately disclosing relevant material business risks.
The full media release can be found here.
3 ASIC releases framework to ensure better financial outcomes for First Nations people
On 14 February 2023, ASIC released its Indigenous Financial Services Framework. This was a result of consultation with Indigenous groups, financial services representatives, government departments and other regulators. Findings from the consultation process reinforced the importance of financial wellbeing to First Nations groups, noting how concepts of financial success may differ between different First Nations people and how First Nations people have been excluded from the Australian financial system.
ASIC aims to use the framework to improve financial outcomes for Indigenous people by focusing on the following:
- providing accessible and appropriate financial products and services
- reducing the impact of harm on individuals and communities
- ensuring a holistic service provision
- establishing culturally appropriate experiences when Indigenous peoples engage with the financial services sector
The framework works in connection with ASIC’s Stretch Reconciliation Action Plan (available here).
The media release can be accessed here and the Indigenous Financial Services Framework can be accessed here.
4 ASIC expands its enforcement focus areas for 2023
ASIC has alerted business that it will continue protecting consumers from financial harm by targeting greenwashing, predatory lending and misleading insurance promises. This announcement coincides with the release of REP 757, a report which outlined the regulatory actions taken from October 2022 to December 2022 and described ASIC’s enforcement priorities for 2023.
ASIC’s enforcement priorities for the upcoming year include:
- sustainable finance practices
- Financial scams
- Cyber and operational resilience
- Investor harms involving crypto-assets
ASIC has also released a regulatory developments timetable for the first time which outlines when ASIC will issue draft or final guidance or create a legislative instrument.
The full media release can be read here.
5 ASIC intends the class order relating to competency standards for SMSF auditors to expire
On 17 February, ASIC announced that it intends to allow Competency Standards for Approved SMSF Auditors [CO 12/1687] to expire on 1 April 2023. ASIC’s view was that the class order is no longer relevant as approved SMSF auditors must comply with standards and requirements under section 128F of the Superannuation Industry (Supervision) Act 1993 (Cth). ASIC invites anyone who believes that they would be adversely affected by the expiration of this class order to make a submission to the Financial Reporting and Audit Team.
The media release can be accessed here.
6 APRA releases supervision and policy priorities for the upcoming year
On 2 February 2023, APRA announced its supervision and policy priorities for 2023. These priorities will guide APRA’s focus areas as it aims to ensure stability in the financial sector, especially given global economic uncertainty.
Key policy priorities include:
- completing key reforms to strengthen the financial and operational resilience of APRA-regulated entities passing key reforms to strengthen the operational resilience of regulated entities and improving outcomes for superannuation members
- reviewing core standards, especially relating to the regulation of conglomerate groups
Key supervision priorities for 2023 include:
- heightened supervision on cyber resilience embedding the capital reforms for banks and insurers
- holding trustees of superannuation funds to account
- addressing the availability, affordability and sustainability of insurance
The media release can be accessed here.
7 Speech at Members Health Directors’ Professional Development Program
On 7 February 2023, Suzanne Smith, APRA Executive Board Member with responsibility for private health insurance and life insurance, spoke at the Members Health Directors’ Professional Development Program.
Ms Smith stated that while the insurance industry had grown over the past two years during the global health crisis surrounding COVID-19, there were still long-term sustainability issues for the sector linked with rising costs of living and an aging population.
Ms Smith expanded on how APRA’s policy and supervision priorities for 2023 would affect the insurance industry, notably insurers need to ensure they have strong cyber security policies and are focused on evolving cyber risks.
APRA also expects insurers to ensure that their outsourcing practises are fit-for-purpose and that there are appropriate frameworks and oversight arrangements in place.
Ms Smith closed her speech by reminding insurers that the new private health insurance framework comes into effect from 1 July 2023 which aims to ensure increased financial resilience among industry participants.
The full speech can be accessed here.
8 APRA re-issues the 2022 MySuper Heatmap
On 24 February 2023, APRA re-issued its 2022 MySuper Heatmap to ensure that the correct international data was included in the investment and performance test metrics. Re-issuing the MySuper heatmap did not alter the performance test determinations issued in August 2022 or any of the products indicated as having poor or significantly poor performance in December 2022.
The media release can be accessed here and the MySuper Heatmap can be accessed here.
9 APRA publishes superannuation statistics for last 2022 quarter
On 28 February 2023, APRA published MySuper Statistics for the December quarter of 2022. The statistics track key measures such as the total superannuation assets and total superannuation contributions for the quarter.
The media release can be found here and the statistics can be accessed here.
10 AUSTRAC cements partnership with UK to intensify fight against financial crime
AUSTRAC signed a Memorandum of Understanding (MOU) with the United Kingdom’s Financial Conduct Authority (FCA) on 16 February 2023. The MOU intends to generate opportunities through the exchange of regulatory information to strengthen operational collaboration, and could result in joint AML/CTF supervision.
AUSTRAC’s media release can be found here.