Welcome to Issue 63 of the FSC Policy Update.
The core purpose of the Financial Services Council is to be a strong advocate for the sectors we represent in Canberra, and this will be a focus of my time at the FSC.
A Federal Election always creates a period of uncertainty for the business community, but the FSC is being proactive to ensure the interests of our members and the consumers they serve have a voice in the political debate.
The FSC has welcomed the Labor Government’s commitment to stability and certainty in the financial services industry, and their election commitment to respond to the Quality of Advice Review to improve the affordability and accessibility of financial advice.
A core issue for the FSC over the past month has also been ensuring there would be no adverse changes to superannuation taxes in the next term of parliament, in the face of a number of sectors and their lobbyists looking to raise taxes superannuation consumers.
I am pleased that both sides of politics responded to the FSC during the election campaign and ruled out further tax changes. This provides consumers confidence and certainty that the superannuation system will deliver on its promise as a long-term retirement savings vehicle.
The FSC is also focusing on deregulation opportunities for the industries we represent.
In my opinion the regulatory pendulum has swung too far and the layers of regulation that have built up are a significant cost on the sector.
The FSC will be strong advocate for an incoming government to remove unnecessary and duplicate regulation, such excessively complex and onerous breach reporting requirements, and unused disclosure obligations in superannuation that have been superseded by the Your Future, Your Super reforms.
A simpler, more efficient industry is key to lower costs and improving consumer engagement.
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Blake Briggs, CEO
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Click on the topic of interest below to read more
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New speakers announced for FSC Life Insurance Summit 2022
Life Insurance Industry Awards now open
Design and Distribution Obligations
ASX Consultation - Enhancing the ASX Investments Products Offering
Quality of Advice Review: submissions close soon
ASIC corrects Legislative Instrument on education requirements
Annual member attestation of compliance and exclusion of certain with FSC Standards
AFCA proposed new funding model
Updating the FSC investment management agreement
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New speakers announced for FSC Life Insurance Summit 2022
Joining keynote speaker Dr Nick Coatsworth at the FSC Life Insurance Summit on Wednesday 27 July will be a host of industry leaders that will challenge and inspire delegates through keynote presentations and panel sessions. Recently announced speakers include:
- Lucy Brogden, Chair, National Mental Health Commission
- Dr Omar Khorshid, President, Australian Medical Association
- Simon Swanson, Managing Director, ClearView
- Jane Dorter, Head of Insurance Claims Solutions, KPMG
- Andrew Beevors, Chief Claims Officer, MLC Insurance
To ensure you don't miss out on THE life insurance conference of the year, register now for special early-bird and Member rates here
Please contact Ben McAlary for more information.
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Life Insurance Industry Awards now open
In 2022 we're looking for entries that excite, inspire and display best-practice. The FSC will be awarding excellence across five categories:
- Best Customer Support Initiative (new in 2022)
- Life Insurance Industry Leader
- Innovation in Claims Handling Services (new in 2022)
- Innovation in Life Insurance Product
- Life Insurance Young Achiever
Visit the FSC website to nominate now.
Please contact Sharon Sherry for more information.
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PARLIAMENT, LEGISLATION AND REGULATION
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Design and Distribution Obligations
The FSC continues to work on issues regarding the implementation of the DDO regime. Matters of note include:
- The FSC is liaising with ASIC on no-action position and/or exemptive relief regarding the scope of the personal advice exemption in the context of voluntary compliance with the DDO regime
- The FSC is currently working with members on reviewing and updating the TMD templates prepared by the FSC. The initial work is focussed on the funds management template and once this is completed the FSC will look at updating the other TMDs.
- The FSC standard questions for distributor DDO due diligence questionnaire (DDQ) were finalised in April and are now available on the FSC website. This document is intended to assist issuers of financial products to conduct due diligence in the selection of distributors.
Please contact Michael Potter or Ashley Davies for more information.
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ASIC met with FSC in mid-May to provide its views on the industry feedback it had received on CP 360 (the consultation paper released by ASIC in March setting out ASIC’s proposed approach on the introduction of the new Corporate Collective Investment Vehicle (CCIV) regime scheduled for 1 July 2022).
ASIC provided the following updates as to its proposed approach including regarding the following key industry requests:
- Net tangible asset (NTA) financial requirements of corporate director: the request to aggregate/amalgamate CCIV corporate director NTA requirements with the NTA requirements of a responsible entity (RE) where it is the sa me entity acting in two different capacities was not agreed.
- Requirements for corporate director to maintain stand alone professional indemnity (PI) insurance: the request to aggregate/amalgamate CCIV corporate director PI requirements with the PI requirements of a responsible entity (RE) where it is the same entity acting in two different capacities was not agreed.
- Reduction in amount of proofs to be provided to ASIC: the request to reduce the amount of proofs required for applications from established managers was not agreed.
The FSC and members reiterated concerns that the approach outlined above is likely to strongly discourage update of the CCIV.
On a more positive note for proponents of the CCIV regime, ASIC did agree to fast track applications for CCIV license variations and not to impose a limit relating to wholesale funds (ASIC would retain a limit on retail sub funds).
ASIC intends to release updated regulatory guides before 1 July 2022 to allow entities adequate time to prepare for the provision of CCIV-related financial services before the new regime commences.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. or Ashley Davies for more information.
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SUPERANNUATION
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The FSC worked with members to develop an industry approach on how to apply the Retirement Income Covenant to risk only superannuation products. The guidance has been provided to the relevant working groups. The FSC will continue to work with members on this issue after 1 July, and there a plans for further discussions after 1 July between members and APRA covering this issue and broader issues with the implementation of the Covenant.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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INVESTMENTS
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ASX Consultation - Enhancing the ASX Investment Products Offering
The ASX released a consultation paper on “Enhancing the ASX Investment Products Offering” which is consulting on enhancements that could be made to the ASX Investment Product offering, particularly with a view to identifying areas where the different rules governing those products (the Listing Rules, the AQUA Rules and the Warrant Rules) could be improved and brought into closer alignment.
This consultation is phase one of a two-stage consultation process and submissions are due mid June 2022.
There are over 100 questions across 14 topics including looking at issues such as the amalgamation of disperse rule books into a single Investment Products rulebook where possible; collection and dissemination of fund data in areas such as NAV, fund prices and flows, distributions etc.
The FSC ASX Consultation Sub Working Group is currently convening and preparing the FSC’s submission to this consultation.
More information on the ASX consultation is available here.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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The introduction of a beneficial ownership register, requiring Australian companies to maintain a public register disclosing ‘beneficial owners’, could be on the horizon. The Financial Action Task Force defines a beneficial owner as ‘the natural person(s) who ultimately owns or controls a customer/and or the natural person on whose behalf the transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.’
The Labor Party took to the election a commitment to introduce a beneficial ownership register. This commitment came in the context of Labor’s multinational tax policy combatting multinational tax avoidance. In March, Labor members of the House of Representatives Standing Committee on Economics recommended in the Report on the Implications of Common Ownership and Capital Concentration in Australia the introduction of a beneficial ownership register in the context of their concern that the growth of large retail investment funds may have competition implications for the Australian economy. The committee members argued that a beneficial ownership register will aid policymakers in understanding the extent of retail fund ownership and identifying competition risks.
The Coalition also stated support for a beneficial ownership register in the course of the election campaign. Previously under the Coalition government, Treasury released a consultation paper in 2017 on Increasing transparency of the beneficial ownership of companies, but this was not followed through.
Further detail on the shape of the proposed register is yet to be released, such as the extent of the trace through and any reporting implications for funds. The FSC will engage with members and government when consultation on concrete proposals is announced.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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ADVICE
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Quality of Advice Review: submissions close soon
The FSC will submit to Michelle Levy’s Quality of Advice Review in early June. FSC members have been collaborating across the membership and the broader sector on solutions to realign the regulatory framework with the direct experience of the consumer while reducing the cost to provide.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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LEGAL
Annual member attestation of compliance and exclusion of certain FSC Standards
As you are aware, the time for preparing the above attestation is approaching in the window from early July and due for lodgement by 30 September 2022.
To assist FSC Members, please note from 1 July 2021 that you are not required to attest to compliance to the following FSC Standards:
- Standard 6: Product Performance – Calculation of Returns
- Standard 8: Scheme Pricing
- Standard 8A: Crediting Rates
- Standard 9: Valuation of Scheme Assets and Liabilities
- Standard 10: Presentation of Past Performance Information and Visual Promotions
- Standard 17: Errors in Pricing/Crediting Rates when Determining Scheme Interests – Correction and Compensation
These Standards will be converted to Guidance Notes.
Also, FSC Standard 7: References to FSC Logo and Standard 20: Superannuation Governance Policy have been repealed.
Consequently, you will not be required to include any of these Standards in the 2021-22 annual attestation.
For further details, please refer to the FSC website - FSC Standards and Guidance Notes
Please contact David McGlynn for more information.
AFCA proposed new funding model
AFCA has recently updated the FSC on the new user-pays funding model following the recent consultation by AFCA with financial firms, noting that in broad terms the final model is not likely to materially deviate from the proposed model that was discussed in March/April. AFCA did however confirm that it will likely be able to accommodate the FSC request for flexibility in terms of payment timing for the revised “user charge”, which will be welcome news for many industry participants.
AFCA has confirmed that the intention is still for the model to be put to AFCA’s independent board in May, for a decision. Any changes would take effect from 1 July 2022.
Please contact Ashley Davies for more information.
Updating the FSC investment management agreement
The FSC is progressing work on updating the FSC investment management agreement (IMA). The FSC is discussing with members and legal counsel what some of the key changes and updates are likely to be. As a first step, a new FSC IMA Working Group has discussed the FSC IMA and agreed on the main changes members would like to see developed has been formed. The FSC is preparing a short summary of these changes and will seek to begin the next stage of amendments shortly.
Please contact Ashley Davies for more information.
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TAX
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- Treasury has requested information from life insurers on the impact of AASB17 on the tax position of life insurers. The request has been provided to the Life Tax Expert Group.
- The FSC met with the ATO to discuss relevant issues for investment managers, including they way that investment funds should report to investors on foreign tax offsets after the Burton decision. The ATO verbally agreed with an approach proposed by the FSC. The ATO agreed to work with the FSC on the details of the approach for the coming end of year, and a longer term solution.
- The FSC has continued to discuss a tax data standard with the Australian Custodial Services Association (ACSA), including the nature of the FSC’s support for the initiative.
- The FSC made a submission to the OECD supporting an exemption for financial services from the OECD’s Pillar 1 Amount A calculations (which relate to global allocation of profits). The submission focused on the case for providing an exemption for reinsurance and investment management (there is some debate about whether these sectors should have an exemption).
- The ALP announced an election policy to implement various tax changes relating to multinationals, including supporting international plans for a global 15% minimum tax; limiting debt deductions, limiting tax deductions for royalty payments to tax havens; public reporting of information on how much tax paid in each jurisdiction and number of employees in the jurisdiction; a public registry of ultimate beneficial ownership; and mandatory reporting of tax haven exposure. Visit the ALP website for more details:
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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