Insurance in Superannuation Voluntary Code of Practice: 31 March is fast approaching, do you intend to adopt the Code?

The Insurance in Superannuation Voluntary Code of Practice (Code) was released by the insurance in superannuation working group on 13 December 2017, with a proposed date of commencement for 1 July 2018.

The Code has been the subject of much comment. However, despite the comment, the deadline for Trustees to register their intention to adopt the Code by 31 March 2018 remains.

Adopting the Voluntary Code

Between now and 31 March 2018 Trustees ought to consider the practical implications for their funds of the key obligations contained in the Code and determine whether or not they intend to adopt the Code.

In practice, adopting the Code means that Trustees would need to consider the key obligations (see the table below) and review their compliance with those obligations.

How voluntary is the Voluntary Code?

The Code is to be adopted on a voluntary basis, where its standards are to be upheld on an “if not, why not” basis. This allows some flexibility for Trustees to justify why certain benefits or aspects of the scheme may not achieve full compliance.

This flexibility is an essential part of the Code. Without flexibility, Trustees may struggle to justify why they had fettered their discretion. The many submissions on this point resulted in the code being voluntary and also being subject to existing laws, regulations and the best interests of beneficiaries. Trustees are still required to develop their own insurance strategy to accommodate their own membership base, and where that strategy does not fit with a particular aspect of the Code, Trustees need only report on why they did not comply with that particular aspect. In that way, Trustees may still exercise discretion.

However, we think the release of the Code may have already changed the superannuation landscape regardless of whether Trustees choose to adopt it or not. For example, if the Code is held out as industry best practice, any subsequent challenges or complaints may be brought on the basis that a Trustee has not upheld industry standards as described in the Code. Accordingly, even if Trustees choose not to adopt the Code, that decision should be considered and documented on an “if not, why not” basis, to mitigate the incidence of any future complaints.

Trustees may also consider whether compliance with the Code may provide a marketing advantage or disadvantage.

Finally, Trustees should remember that although the Code takes effect from 1 July 2018, it may be phased in over time. By 31 December 2018, Trustees must publish their own transition plan, detailing how the Code will be implemented in line with certain policy renewals and other fund events. So, if there are areas of concern or difficulty for Trustee compliance, those areas should be specified in the transition plan and the difficult aspects of transitioning to the Code may be scheduled for a later time.

Please call us with any queries, or if you would like us to send you some additional tools to work through the key obligations of the Code.

Key obligations under the Code

#Publication dateName of document / instrumentDescription of instrumentCommencement date
1.20 March 202020-068MR Guidelines for meeting upcoming AGM and financial reporting requirements

ASIC confirms it will take no action if the AGMs are postponed for two months (until the end of July).

ASIC supports the holding of AGMs using appropriate technology.
From 20 March 2020
2.23 March 202020-070MR ASIC recalibrates its regulatory priorities to focus on COVID-19 challenges

ASIC has immediately suspended a number of near-term activities which are not time-critical.

ASIC will suspend its enhanced on-site supervisory work such as the Close and Continuous Monitoring Program.

ASIC will work with financial institutions to further accelerate the payment of outstanding remediation to customers.

ASIC will take account of the circumstances in which lenders, acting reasonably, are currently operating when administering the law.

ASIC will maintain its enforcement activities and continue to investigate and take action where the public interest warrants us to do so against any person or entity that breaks the law.
From 23 March 2020
3. 31 March 202020-075MR Facilitating capital raisings during COVID-19 period

ASIC has provided temporary relief to allow ‘low doc’ placements, rights issues and share purchase plans (SPP) where a listed company has been suspended for a total of up to 10 days in the previous 12-month period. Companies can rely on ASIC Corporations (Trading Suspension Relief) Instrument 2020/289 and ASIC Corporations (Amendment) Instrument 2020/290 without making an individual application. (see #4 and #5)From 2 April 2020
4. 2 April 2020ASIC Corporations (Trading Suspensions Relief) Instrument 2020/289

This instrument modifies the operation of s 708AA, 708A, 1012DAA and 1012DA of the Corporations Act 2001 by declaring that the sections apply as if the permissible total trading suspension days specified in the sections were 10 days instead of 5 days.

ASIC media release accompanying this legislative instrument
From 2 April 2020
5.2 April 2020ASIC Corporations (Amendment) Instrument 2020/290

This instrument amends ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547 as if the permissible total trading suspension days specified in paragraph 7(a)(ii) were 10 days instead of 5 days.

ASIC media release accompanying this legislative instrument
From 2 April 2020
6.9 April 202020-084MR ASIC to provide additional time for unlisted entity financial reports

Extended lodgement periods for unlisted entities

ASIC today announced that it will extend the deadline for unlisted entities to lodge financial reports under Chapters 2M and 7 of the Corporations Act 2001 (the Act) by one month for balance dates from 31 December 2019 to 31 March 2020.

The extended deadlines will not apply for 31 December 2019 balance dates if the reporting deadline has already passed.

An instrument extending the deadlines is expected to be registered on the Federal Register of Legislation by the end of next week.

Further detail appears in the attachment to this release.
From 9 April 2020
7.14 April 2020ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2020/355 (Cth)

ASIC announced three temporary relief measures that will assist industry in providing consumers with affordable and timely advice during the COVID-19 pandemic:

1. Relief to facilitate advice about early access to superannuation: removed requirement for a statement of advice (SOA), permits tax agents to give advice without a AFS licence and issues a temporary no-action position for superannuation trustees to expand the scope of personal advice that may be provided by the superannuation trustee and ‘intra-fund advice’;

2. Relief to extend the timeframe for providing time-critical SOAs; and

3. Relief to enable a record of advice to be given in certain circumstances.

ASIC media release accompanying this legislative instrument
8. 14 April 202020-086MR Details of changes to ASIC regulatory work and priorities in light of COVID-19
ASIC provided further detail on its revised priorities and work schedule as a result of the COVID-19 crisis. ASIC::

  • has stepped up its markets supervision work to ensure investors are appropriately informed, and protect against manipulation and abuse;

  • will heighten its support for consumers who may be vulnerable to scams and sharp practices, receive poor advice, or need assistance in finding information and support should they fall into hardship;

  • will identify other actions needed to support firms such as facilitating the timely completion of capital raisings and other urgent transactions, providing regulatory relief, where appropriate, and identifying measures to support small business; and

  • will limit the regulatory activity that they will need to respond to as much as possible.
    ASIC noted that enforcement action will continue, however there may be some changes to the timing and process of investigations.

  • ASIC noted that enforcement action will continue, however there may be some changes to the timing and process of investigations.
    From 14 April 2020
    9. 20 April 202020-093MR ASIC reports on corporate finance regulation – July to December 2019

    ASIC has released the final report on its oversight of corporate finance activity between July to December 2019 (REP 659 ASIC regulation of corporate finance: July to December 2019). The report can be accessed here

    The report discusses ASIC's key observations for the period from 1 July 2019 to 31 December 2019, and ASIC's areas of focus for the next six months.

    The report also outlines measures taken in response to COVID-19, including financial reporting lodgement extensions, guidelines about AGMs, and relief measures to enable both emergency and low-doc capital raisings. ASIC will continue to closely monitor the evolving COVID-19 situation and provide further updates as necessary.

    10.23 April 202020-097MR ASIC supports increased transparency in capital raisings

    ASIC acknowledges ASX’s class waiver amendments on 22 April 2020 (see herehere and ASX entry 15 below).

    ASIC supports the enhanced disclosure requirements for placement allocations and Share Purchase Plans (SPP) that are being conducted by companies using the temporary emergency capital raising waiver announced by ASX on 31 March 2020.

    ASIC notes that pursuant to the ASX Compliance Update no 04/20, issuers must provide it with a detailed allocation spreadsheet for capital raisings completed in reliance with the class waiver. ASIC will be reviewing these spreadsheets/monitoring disclosures carefully to ensure they are accurate, sufficiently detailed and provide meaningful, rather than ‘boiler plate’ disclosure.

    ASIC encourage other capital raisings that do not need to rely on the waiver to comply with the enhanced disclosure required under ASX’s temporary waiver.
    From 23 April 2020
    11.27 April 2020 ASIC letters to general and life insurers in the current COVID-19 environment
    ASIC expressed its commitment to working constructively and pragmatically with general and life insurers to help Australians affected by the COVID Pandemic to recover, and to aid the general functioning of the economy.

    ASIC expects insurers to handle insurance claims with utmost good faith and to deal with complaints genuinely, promptly, fairly and consistently.

    ASIC expects insurers be flexible in dealing with consumers’ specific circumstances. Where consumers are no longer able to pay premiums due to reduced income, insurers should consider how they can best respond to this issue in order to help consumers continue to maintain key insurance coverage. This might include, where appropriate and reasonable, measures including premium ‘holidays’, deferrals, or reductions for a reasonable period of time.

    ASIC also expects insurers to communicate proactively, clearly and accurately with consumers about their insurance cover, recognising the rapidly changing situation they are facing.
    From 27 April 2020
    12.6 May 202020-102MR Retail investors at risk in volatile markets
    ASIC notes there has been a substantial increase in retail activity across the securities market, as well as greater exposure to risk during the COVID period.

    ASIC notes a rapid increase in trading frequency, increases in retail investors and warns of the danger of day trading and unpredictable news/events.


    Anne MacNamara

    Anne advises on regulatory reform, superannuation fund product offerings, licensing, disclosure, fee arrangements and more.

    Adrian Verdnik

    Adrian’s financial services law practice covers superannuation, managed funds, insurance, and financial advice.

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