RegTracker - Super - 7 September 2020

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By Mark Bland, Partner, Geoffrey McCarthy, Special Counsel and Ashley Kasner, Lawyer

This fortnightly update is designed to help superannuation trustees track and manage regulatory change. We look ahead to forthcoming developments, look back at recent changes and then consider the impact on trustees. This edition’s spotlight is on APRA’s consultation on its proposals to expand its superannuation data collection.

Looking ahead

10 September – House of Representatives Economics Committee public hearing on the superannuation sector. Witnesses are Industry Super Holdings, ISPT, Future Super, Verve Super, Mine Super, Hostplus, AMP and Cbus.

21 September – Monthly Pandemic Data Collection report due for submission to APRA via D2A. Frequently asked questions – Pandemic Data Collection

Looking back

3 September- Senate has passed, with amendments, the Payment Times Reporting Bill which would require enterprises with an annual total income of over $100 million to publicly report on their payment terms and practices in respect of a small business supplier.  To return to House of Representatives to consider Senate amendments that were supported by the Government.  Payment Times Reporting Bill 2020

3 September – The 2020/2021 deadline for applications to access superannuation on compassionate grounds relating to coronavirus was extended to 31 December 2020 Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations (No. 3) 2020

3 September – Senate Committee on Financial Technology and Regulatory Technology tabled Interim Report.  The report recommended prioritising extension of consumer data rights in relation to superannuation and establishing an environment supportive of superannuation investment in venture capital subject to the sole purpose test.

3 September – Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020 enacted.  The Bills that employees have choice of superannuation fund, notwithstanding the terms of workplace determinations or industrial agreements from 1 July 2021.  A review will be conducted within 30 months of the impact on defined benefits schemes.

2 September – The Selection of Bills Committee decided that the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 be referred immediately to the Economics Legislation Committee for inquiry and report by 4 November 2020 Enquiry Page.  The bill would increase from 4 to 6 the maximum number of members of a self managed superannuation fund or small APRA fund.

2 September – FASEA releases draft Relevant Providers Degrees, Qualifications and Courses Standard 2020 Amendments. The amendments include some additional approved degrees and courses and approval of credit for coursework for a professional designation.

31 August – APRA publishes 2020-2024 Corporate Plan. For superannuation, APRA’s superannuation focus is on improved financial performance across the industry relative to key benchmarks, including exit of underperforming funds and improved efficiency across the industry, including with respect to fees and costs, insurance and outsourcing, while maintaining high standards of governance and risk management.

31 August – ASIC publishes 2020-24 Corporate Plan. The plan says ASIC plans to deliver as a conduct regulator for superannuation with a focus on egregious governance failures in superannuation, as well focuses on communication in insurance.

31 August – House of Representative passed the Treasury Laws (More Flexible Superannuation) Bill 2020.  The Bill would allow persons aged 65 and 66 to bring forward non-concessional contributions. The Senate is to consider the Bill together with amendments from Senator Hanson providing for a range of additional concessional contributions.

28 August – APRA releases final consultation package to expand depth breadth and consistency of its superannuation data collection as discussed below and outlined in their media release: APRA takes next steps to expand its superannuation data collection.

26 August – APRA replaces CPS 226 Margining and risk mitigation for non-centrally cleared derivatives to defer commencement of the next two phase-in periods of initial margin requirements for non-centrally cleared derivatives by 12 months, consistent with the revised international timetable.

On the horizon spotlight – APRA Data Collection Consultation

In 2019 APRA launched a multi-year project to upgrade the breadth, depth and quality of its superannuation data collection to enhance industry transparency and accountability.  On 28 August 2020, APRA issued a consultation package on phase 1 of its proposal to enhance data reporting to APRA.  Phase 1 focusses on the breadth of the data recording.

APRA’s Superannuation Data Transformation aims to drive better industry practices and improve member outcomes by significantly enhancing the comparability and consistency of reported data. The project will make it easier for APRA and other stakeholders to scrutinise and reliably compare fund and product performance, especially in the choice segment of the market.

Links to the phase 1 consultations can be found here.

New data collection platform

APRA is undertaking a significant program to transform its data platform to provide a robust foundation for its evolving data collection, analysis and reporting needs.

An integral component of the program is the replacement of APRA’s current data collection platform, Direct to APRA (D2A), with a modern, efficient and flexible collection solution – its new “Data Collection Solution”, but this is currently suspended due to COVID-19.

The new Data Collection Solution is the current term used to describe the system that will replace APRA’s data collection platform, D2A. APRA considers replacing D2A with a modern, efficient and flexible data collection solution to be an integral part of its data transformation program.

The new Data Collection Solution will be a web-based system through which users will be able to authenticate themselves and submit their organisation’s data to meet their reporting requirements. Users will also be able to view the schedule of upcoming reporting obligations and due dates, and make their required submissions in a number of formats.

Reporting forms, layout, data fields, and due dates will remain as they are in D2A, and entities may continue to rely on D2A attribute codes for all current reporting forms. Third-party service providers will still be able to submit on behalf of reporting entities.

The new Data Collection Solution will be the single portal through which entities will submit APRA reporting returns and supporting documents, such as audit reports. Over time, it is expected that all other types of documents and online forms sent by entities through SecureDoc, APRA’s extranet, and email, will also be submitted through the new Data Collection Solution.

APRA’s consultation on data requirements

APRA has divided the consultation into three phases:

  • Phase 1 (Breadth) is to address what APRA sees as the most urgent gaps in APRA’s data collection, particularly for choice products and investment options;
  • Phase 2 (Depth) is to increase the granularity of the entire collection, taking advantage of APRA’s new Data Collection Solution and enhanced data analytic capabilities; and
  • Phase 3 (Quality) is to assess the quality and consistency of the additional data reported during Phases 1 and 2, and review and address any implementation issues.

Phase 1 Consultation

On Friday 28 August APRA released the final consultation package for Phase 1 inviting submissions and containing topic papers, draft reporting standards and data collection templates covering fees and costs (due 13 November 2020), insurance arrangements (due 30 October 2020), expense reporting (due 2 October 2020) and asset allocation (due 16 October 2020).

Other areas that have already in early 2020 been the subject of consultation are performance and member accounts and RSE structure and profile.

APRA recognises the challengers for submitters during the COVID-19 pandemic and is taking a flexible approach to consultation including being open to meetings and roundtables.

Each proposal is supported by draft reporting standards and topic papers.

Further APRA is seeking voluntary submission of data on a best endeavours basis in relation to 30 June 2019 by the same due dates to assist in understanding the effect of its proposals.  APRA proposes to publish the data to assist Trustees in meeting their strategic planning and outcomes assessment under SPS 515.

APRA has published tables of the key changes for each topic.

Impact on Trustees

Data Collection Solution

APRA has indicated that it will expect Trustees to:

  • Manage their own internal readiness for the new Data Collection Solution;
  • Ensure the relevant people within their entities are receiving new Data Collection Solution project communications from APRA;
  • Develop internal business cases for funding and establish project teams as required to enable their own readiness;
  • Participate in the testing process to ensure they are able submit returns prior to go-live;
  • Ensure all relevant users are set up with authentication credentials for testing and go-live;
  • Ensure all relevant users complete the provided training prior to go-live;
  • Provide feedback and raise any concerns throughout the implementation; and
  • Submit all data, including resubmissions, through the new solution post go-live.

While this project is suspended the work and efficiencies that will be involved is relevant to the current consultation.

APRA Data Consultations

Trustees need to engage with the detailed proposals in light of the potential increase in reporting burden, which needs to be assessed in light of the potential outcomes on the subsequent phases of work on depth and quality.  The information reported will be relevant for stakeholders comparing funds and is likely to support APRA efforts to identify poorly performing funds and APRA’s agenda to reduce the number of funds.

APRA Deputy Chair Helen Rowell said:

“In particular, APRA remains strongly committed to increasing the transparency and accountability of the choice segment of the market, which represents $880 million of Australians’ retirement balances. The data reported through APRA’s Superannuation Data Transformation is fundamental to our plan to include choice products and options in an expanded version of our MySuper Product Heatmap.

An enhanced superannuation data collection is also important for industry. Trustees should already be using this type of data to help them fulfil existing regulatory requirements, such as their Business Performance Review and legislated outcomes assessment. If not, it would seem unlikely that they could truly understand the outcomes being delivered to their members and how they’re performing relative to their peers.”

Trustees should take into account how APRA’s proposals align with the data the Trustees are gathering for the purpose of their own planning and member outcome assessments and the requirements may indicate some measures APRA will expect be considered.

For further information, please do not hesitate to contact us.

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