Consumers will soon start to feel the impact of a changed regulatory landscape. The government got a fair number of bills passed last week that will have an impact on the financial services industry, going some way to implementing its agenda before the election is called.
The following bills with banking, finance and superannuation impact were passed.
Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018. The new law, which is to be phased in over two years, requires financial and credit product issuers to identify the consumers for whom the product is appropriate and direct distribution to that target market. They will have to select appropriate distribution channels and periodically review those arrangements to ensure they continue to be appropriate.
ASIC will have the power to intervene where there is a risk of significant consumer detriment.
The Treasury Laws Amendment (Mutual Reforms) Bill 2019 defines a mutual entity in the Corporations Act for the first time. It establishes mutual capital instruments as “a new bespoke capital instrument for mutual entities.”
The new law permits mutual entities registered under the Corporations Act to issue equity capital without risking their mutual structure or status was passed into law yesterday, giving the mutual banking sector a major boost.
The act also removes some uncertainties from the demutualisation provisions affecting mutual financial institutions.
Australian Business Securitisation Fund Bill 2019 made it through the parliamentary logjam, with its passage in the Senate on Wednesday.
The ABSF will invest in securities issued by warehouses and special purpose vehicles, with the aim of supporting the ability of small lenders to grow and provide credit to underserviced segments of the SME market.
In this way, the government hopes to make the SME lending sector more competitive.
The government has committed A$2 billion to the scheme, which will be credited to the fund over four years. The first payment into the fund will be $250 million, to be made on 1 July.
Treasury Laws Amendment (2019 No.1) Bill 2019 contains a number of amendments, including changes the First Home Super Saver scheme so that first home buyers are still eligible for the FHSS even if they enter into a contract to purchase or construct their first home just prior to receiving their FHSS money.
The bill was amended to remove a proposed increase in the maximum number of self-managed super fund members from four to six.
Treasury Laws Amendment (Improving Accountability of Member Outcomes in Superannuation Measures No.1) Bill 2019. The new law imposes stronger obligations on superannuation funds to meet members’ best interests by way of a new annual outcomes assessment. It makes funds more accountable for how they spend members’ money through new rules for reporting expenses. It gives APRA more power over authorisation of default MySuper products and it gives APRA more power to take corrective action in cases where a fund is not acting in members’ best interests. It extends civil penalties to fund trustees who breach the best interests duty
Treasury Laws Amendment (increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019 was passed with amendments to implement the changes announced in the 2019-20 Federal Budget.
As originally introduced, the Bill amends the tax law to increase the threshold below which amounts can be immediately deducted under these rules from $20,000 to $25,000 from 29 January 2019 until 30 June 2020, and extend by 12 months to 30 June 2020 the period during which small business entities can access expanded accelerated depreciation rules (instant asset write-off).
The amendments implement the Government’s 2019-20 Budget changes so that the write-off is extended to medium sized businesses (turnover up to $50 million), where it previously only applied to small business entities; and the instant asset write-off threshold increases from $25,000 to $30,000. The threshold applies on a per asset basis, so eligible businesses can instantly write off multiple assets.
Bills that did not make it through the logjam include:
- a housing affordability bill to remove entitlement to the main residence CGT exemption for foreign residents;
- a bill to establish the primary objectives of the superannuation system; and
- a bill to mandate one-third independent directors on superannuation trustee boards.