Authors:
Australia | Publication | October 2024
This article was co-authored with Michele Beck, Tom Clark, Masooma Saberi and Vivian Truong.
In September 2024, ASIC continued to focus on regulatory and enforcement action in the superannuation industry by:
ASIC also:
Further, ASIC succeeded in its greenwashing action in the Federal Court of Australia against Vanguard Investments Australia (Vanguard). Vanguard was ordered to pay a $12.9 million penalty for making misleading claims about its ESG exclusionary investment screens.
September also saw APRA focus on enhancing superannuation data collections and improving transparency in superannuation.
AUSTRAC commented on the introduction of the AML/CTF Amendment Bill in Parliament.
On 2 September 2024, ASIC and APRA released the public notes from the latest Superannuation CEO Roundtables, held on 18 June and 16 July 2024. Twelve superannuation trustee CEOs and executives attended the Roundtables, representing a broad cross-section of the industry.
The Roundtable discussions highlighted the ongoing importance of investment governance, integrity, and robust risk culture in the superannuation industry.
ASIC’s media release can be accessed here. The public notes can be accessed here.
ASIC released REP 794 ASIC enforcement and regulatory update: January to June 2024 (REP 794) on 9 September 2024, setting out recent outcomes in enforcement and regulation. REP 794 outlined key ASIC activities between 1 January and 30 June 2024, including:
ASIC emphasised that it will continue to focus on enforcement and regulatory activities relating to crypto-assets and blockchain technology, financial hardship, scams, greenwashing, banking, unconscionable conduct, and superannuation cold-calling.
ASIC’s media release can be accessed here.
ASIC has updated the default rate of nominal wage inflation in ASIC (Superannuation Calculators and Retirement Estimates) Instrument 2022/603 and Regulatory Guide 276 Superannuation forecasts: Calculators and retirement estimates (RG 276). This follows industry feedback on consultation CS 7 Proposed update to superannuation forecasts relief instrument.
ASIC decreased the default rate from 4% p.a. to 3.7% p.a. to align with the revised long-term wage growth forecast in the 2023 Intergenerational Report. The revised rate of 3.7% p.a. applies from 1 January 2025.
Providers of superannuation calculators and retirement estimates must update the default inflation rate used in their economic assumptions by 31 December 2024.
ASIC’s media release can be accessed here.
On 10 September 2024, ASIC released REP 795 Design and distribution obligations: Compliance with the reasonable steps obligation (REP 795). This Report outlines ASIC’s findings from its surveillance of 19 issuers of high-risk investment, insurance and credit products between October 2023 and August 2024.
Design and distribution obligations require product issuers to take reasonable steps to support ap
propriate distribution of their products to ensure that the products meet consumers’ needs.
In REP 795, ASIC shared key observations about, and recommendations for:
ASIC also released minor updates to Regulatory Guide 274 Product design and distribution obligations (RG 274) to clarify its guidance on the appropriateness requirement for target market determinations.
ASIC’s media release can be accessed here.
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) (Bill) passed Parliament on 9 September 2024 and received Royal Assent on 17 September 2024.
The Bill amends the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) to, among other things, introduce mandatory climate reporting. From 1 January 2025, many large Australian businesses and financial institutions must prepare annual sustainability reports with climate-related financial disclosures. Smaller entities will be required to start reporting on or after 1 July 2026 and 1 July 2027.
ASIC plans to engage with stakeholders and industry participants before issuing or updating regulatory guidance on complying with the mandatory sustainability reporting obligations. ASIC has provided information on the new regime in its sustainability reporting web page.
ASIC’s media release can be accessed here.
ASIC reissued Regulatory Guide 121 Doing financial services business in Australia (RG 121), which it last updated in June 2013.
RG 121 provides guidance about the financial services regime for individuals and companies outside Australia. This guidance includes information on when an AFS licence is needed, available exemptions from holding an AFS licence, and AFS licensee obligations.
RG 121 was reissued to:
ASIC’s media release can be accessed here.
ASIC has made two legislative instruments, ASIC Corporations and Credit (Breach Reporting–Reportable Situations) Instrument 2024/620 and ASIC Corporations Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508, to extend reportable situations relief and personal advice record keeping requirements.
The relief and requirements are set out in instruments that are due to expire in October 2024. ASIC has extended the instruments for five years (until October 2029), as they are operating efficiently and effectively and continue to form a necessary and useful part of the legislative framework
This decision follows a public consultation in which six submissions were received. The submissions were generally supportive of the proposal to extend the operation of the relief and requirements. However, the submissions advocated for wider relief from the reportable situations regime, and migration of the relief and requirements to primary law.
ASIC’s media release can be accessed here.
On 25 September 2024, the Federal Court ordered Vanguard to pay a $12.9 million penalty for making misleading claims about ESG exclusionary investment screens.
ASIC commenced proceedings against Vanguard in July 2023, alleging greenwashing in relation to the Vanguard Ethically Conscious Global Aggregate Bond Index Fund (Fund). The Court found that approximately 74% of the securities in the Fund were not researched or screened against applicable ESG criteria, and that Vanguard had misrepresented the “ethical” characteristics of the Fund.
Greenwashing continues to be an enforcement priority for ASIC, and recent regulatory interventions are outlined in Report 791 ASIC’s recent greenwashing interventions.
ASIC’s media release can be accessed here. The full judgment can be accessed here.
ASIC will allow the ASIC Corporations (Land Holding for Primary Production Schemes) Instrument 2024/15 to expire on 1 October 2024, as the instrument is no longer necessary.
The instrument imposed minimum standards that a responsible entity must meet regarding the holding of certain interests in land for primary production managed investment schemes.
ASIC’s media release can be accessed here.
On 30 September 2024, ASIC released an updated version of Regulatory Guide 236 Do I need an AFS licence to participate in carbon markets? (RG 236) to:
ASIC consulted with stakeholders earlier this year by releasing Consultation Paper 378 Safeguard mechanism reforms: Updates to RG 236. ASIC received 19 submissions, including one from Norton Rose Fulbright Australia. See our submission here.
ASIC’s media release can be accessed here.
After receiving mixed feedback from stakeholders, ASIC has extended the operation of ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 for a transitional period of 18 months. This will allow for further consultation on the appropriateness and form of the relief.
The transitional relief is provided under ASIC Corporations (Amendment) Instrument 2024/618. The Employee Redundancy Funds instrument, which was due to expire on 1 October 2024, grants relief to operators and promoters of employee redundancy funds from the AFS licensing and managed investment provisions of the Corporations Act. Entities relying on the relief must notify ASIC by 31 October 2024.
Further consultation is intended for early 2025.
ASIC’s media release can be accessed here.
On 20 September 2024, APRA released a response to its recent consultation on enhancements to superannuation data collections relating to indirect investment costs and trustee financial statements reporting.
In the consultation, APRA sought feedback on ways to improve the breadth, depth and quality of APRA’s superannuation data collection. Submissions were largely supportive of APRA’s proposals. However, some submissions raised concerns about:
APRA’s response clarified the following:
APRA intends to release a second response by the end of 2024, addressing proposed enhancements for the collection of data on investments and RSE, and RSE licensee, profile.
APRA’s media release can be accessed here. APRA’s response can be accessed here.
On 24 September 2024, APRA released the Comprehensive Product Performance Package (CPPP), which sets out product performance metrics and insights in relation to 876 MySuper and choice products. The data derives from the legislated performance test and APRA’s superannuation heatmaps.
The CPPP is intended to increase transparency and improve member outcomes in the superannuation industry.
APRA’s media release can be accessed here. The CPPP can be accessed here.
On 26 September 2024, APRA released its bi-annual intermediated general insurance statistics for June 2024. This publication outlines key statistics on intermediated general insurance placed with APRA-authorised general insurers, Lloyd's underwriters and unauthorised foreign insurers.
APRA’s media release can be accessed here. The statistics can be accessed here.
On 11 September 2024, the Commonwealth Attorney-General introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 to Parliament.
The Bill aims to modernise the AML/CTF regime and better protect the community from financially-enabled crimes. The Bill also aims to strengthen and update the existing regime to improve its effectiveness.
The Bill has three key objectives:
The Attorney-General’s Department and AUSTRAC consulted on the proposed reforms and received over 270 submissions over 2023-2024.
AUSTRAC’s media release can be accessed here. More information about the Bill can be accessed here. To stay updated, you can access the Norton Rose Fulbright AML/CTF hub: here.
Publication
The Court of Appeal has overturned a 2023 High Court decision in Manolete v White [2024], ruling that courts cannot issue injunctions requiring members to draw down their occupational pensions to make them available to judgment creditors.
Publication
The Chancellor presented her maiden Budget on October 30, 2024.
Publication
On October 29, 2024, the PPF published a response to its March 2024 consultation, confirming that it would proceed with its proposal to give actuaries the option of using a bespoke discount rate assumption in s. 143 valuations of smaller pension schemes.
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