APRA has taken a more assertive approach to promoting member outcomes and identifying underperforming super funds. Treasury also announced reforms to improve compliance with superannuation guarantee obligations by employers. Additionally, ASIC will extend the transitional period for disclosure of some fees and costs in super fund statements and documentation.

1. While all care has been taken in the preparation of this information, QMV Solutions takes no responsibility for any loss or damage
suffered from relying on this information. This information is not intended to be financial, tax or legal advice.
August 2017 | Superannuation IndustryLegal & RegulatoryUpdate
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August 2017 In Brief
Major Reform Updates
Accountability and Member
Outcomes
31 August 2017
Policy Announcement
Treasury recently released exposure draft legislation intending to promote
greater accountability and member outcomes in the superannuation system.
The draft legislation would implement changes including:
▪Replacing the current MySuper best interests determination ‘scale test'
with an 'outcomes test'; and
▪APRA powers to refuse or cancel MySuper authorisation, and direction
making powers enhanced.
APRA issued a letter to all RSE Licensees on 31 August which specifies the
methodology which APRA has applied in assessing member outcomes and
fund sustainability.
APRA has identified certain RSE Licensees which performed poorly on an
absolute and relative basis on most quantifiable metrics, and will engage
with these licensees to address weaknesses or plan a transition.
QMV recommends that trustees review strategic business planning to
include consideration of relevant outcomes & future sustainability.
Superannuation Guarantee
Reforms
29 August 2017
Policy Announcement
Treasury has announced a suite of reforms to the Superannuation
Guarantee regime, with the intention of improving compliance by employers.
The announced reforms include:
▪ Increasing the frequency of superannuation funds reporting on
contribution receipts (to at least monthly);
▪ Aligning the transition dates for the rollout of Single Touch Payroll to 1
July 2018 (employers with 20+ employees) or 1 July 2019 (all employers);
▪ Enhancing the ATO’s SG Charge recovery powers, including
strengthening director penalty notices and security bonds for high risk
employers; and
▪ Allowing the ATO to seek court-order remedies in serious cases of non-
compliance.
QMV suggests that superannuation fund trustees remain attentive to
planned changes to the obligations to report contribution receipts to
the ATO, including planning for the implementation of such changes.
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APRA’s assertive approach to promoting member outcomes represents a significant shift in
the regulatory environment for superannuation trustees. August also saw a couple of
important developments, with the announcement of reforms to promote compliance with the
Superannuation Guarantee regime. ASIC also announced that there will be subtle changes
to the long running RG97 Fee & Cost Disclosure transitional period.

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While all care has been taken in the preparation of this information, QMV Solutions takes no responsibility for any loss or damage
suffered from relying on this information. This information is not intended to be financial, tax or legal advice.
Technical Changes & Updates
MySuper Transfer Taxation
23 August 2017
Assent of legislation
The Treasury Laws Amendment (2017 Measures No 4) Bill 2017 has
received assent and provides income tax relief for transfers within a
superannuation fund to a MySuper product between 29 June 2015 and 1
July 2017.
The relief will allow a complying superannuation fund to defer an income tax
liability for assets transferred to the MySuper product so that the liability will
not arise until an ultimate disposal of the asset.
QMV recommends that superannuation fund trustees transitioning
members to a MySuper product seeks tax advice.
Prudential Standard - OTC
Derivative Risk Mitigation
7 August 2017
Finalised Revised Standard
APRA has finalised the revised Prudential Standard CPS 226 Margining
and risk mitigation for non-centrally cleared derivatives (CPS 226),
which takes effect from 1 September 2017.
The Standard permits substituted compliance with respect to the margin
requirement or provisions of certain foreign jurisdictions.
The changes clarify that substituted compliance is permitted for a trading
relationship where the obligation to exchange margins under both CPS
226 and equivalent foreign margin requirements applies, or would apply
if the covered counterparty’s level of non-centrally cleared derivatives
exceeded a level specified in those margin requirements.
Superannuation funds with internal investment management functions
which trade in international OTC derivatives may need to update
internal processes and compliance arrangements.
AML-CTF Reforms
17 August 2017
Introduction of legislation
The Minister of Justice has announced reforms to the Anti-Money
Laundering and Counter-Terrorism Financing Act and increase the powers
of AUSTRAC. The Bill will:
▪ Close a regulatory gap by bringing digital currency exchange providers
under the remit of AUSTRAC;
▪ Strengthen AUSTRAC’s investigation and enforcement powers;
▪ Allow related bodies corporate to share information; and
▪ Provide regulatory relief to industry through the deregulation of low-risk
industry sectors.
The amendments are unlikely to have a significant impact on the
obligations of superannuation fund trustees. Greater information
sharing within corporate groups may assist some superannuation fund
trustees.
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3. August 2017 | Pension & Superannuation RegulatoryUpdate
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While all care has been taken in the preparation of this information, QMV Solutions takes no responsibility for any loss or damage
suffered from relying on this information. This information is not intended to be financial, tax or legal advice.
Policy & Guidance
Fee Disclosure (RG97)
29 August 2017
Announcement
The Australian Securities and Investments Commission (ASIC) has
announced that it intends to make amendments to the legislative instrument
providing Class Order relief during the transition to the enhanced investment
fee and indirect cost disclosure obligations.
Relief from compliance with the enhanced investment fee and indirect costs
product disclosure requirements, to which ASIC has provided guidance in
Regulatory Guide 97 (RG97), will expire on 30 September 2017.
In response to industry consultation, ASIC will extend the deadline for
disclosure of property operating costs in the investment fee or indirect costs
to 30 September 2018.
The Class Order relief for the periodic reporting (benefit statement)
obligations is also expected to be extended to statements issues effective
29 June 2018 or earlier.
QMV recommends that superannuation fund trustees work closely with
investment managers and custodians to ensure that information and
procedures are in place to calculate fees and costs appropriately.
Consideration should also be given to ensuring that product
disclosure, benefit statement and member guidance processes
accommodate the changes.
Propagation Arrangements
22 August 2017
Draft Guidance
The ATO has released a draft Practical Compliance Guide line (PCG
2017/D16) setting out its compliance approach to the use of propagation to
select assets for disposal.
This draft guideline applies to RSEs that contract with custodians to provide
custodial and investment administration services for fund assets.
Propagation is a term adopted by custodians to describe a tax parcel
selection process. The draft guideline intends to assist RSEs to examine the
characteristics of their propagation arrangements to determine the likelihood
of an ATO review.
Consultation period ends on 2 October 2017, when finalised the guideline
will apply from 1 July 2016.
QMV recommends that trustees review the draft guideline and provide
any comments or concerns to the ATO during consultation.
More Questions or Need Support?
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QMV partners with superannuation fund trustees and
administrators to adapt to changes in the legal and
regulatory environment.
If you have any questions or need assistance, you can
contact me directly at jsteffanoni@qmvsolutions.com
Jonathan Steffanoni, Principal Consultant, Legal & Risk