I know that it is cliched but my expectations in January for 2020 were nothing close to how this year is turning out. On New Year’s Eve I was standing in the middle of thousands of strangers, in the heart of Vienna, with my mother as we counted down to the New Year thinking about what it would bring. I had high expectations for 2020, it was going to be even more amazing than 2019. I was moving to a new city, starting a new job, learning new skills and knowledge, and making new friends. Then Covid-19 hit Australian shores and the nation, and in line with the rest of the world, we went into isolation.
In the midst of navigating what was our new norm, I watched the IQ team step out of traditional roles and unite as a team, to ensure the transition to a virtual business was seamless and successful. Steering committees were formed, help buddies were assigned and IQ Connects was formed. IQs first priority was reaching out to everyone in our team to make sure they were okay, and they had all that they needed. IQ Connects became the network where internal communication and information tools brought us together. But more than that, it is about conversations, activities and personal connections that provide support and community. We now have virtual exercise, trivia and family fun competitions as well as facilitating our Friday Social Time. We are still a team!
I have been involved in a range of projects since our isolation began in March, allowing me to create a greater knowledge base and seize opportunities I would not have otherwise had. Whether it’s been regulatory change such as the COVID-19 early release of benefits, or Best Practice Business Processes, the past eight weeks have shown me the importance of adaptability, resilience and courage; not just in business but in life. These are qualities that I have noticed IQ Group employees have in spades, qualities that are nurtured and encouraged by the Executive team and have allowed us to continue to do our best work for our customers.
Two-thousand and Twenty has not begun anything like I thought it would. Being a grad has not been what was expected when I first started with IQ Group. The world has changed but this is a time I am going to remember for the rest of my life.
On 5 May 2020, IQ Group’s CEO, Brian Peters, hosted a virtual session on pandemics impact on the Governments regulatory agenda, with IQ Group’s Head of Industry Insights – David Haynes providing commentary on the key impacts for the Industry.
Six months ago, the Regulators were overseeing a substantial regulatory change agenda, driven largely by the findings of the Financial Services Royal Commission. Today that agenda, in most part will experience delay however, even though the Industry post COVID-19 may be quite different operationally, the RC findings incorporated in the Regulators change agenda stand firm for implementation.
The discussion covered a wide range of topics:
NEW LEGISLATION AND THE CURRENT ENVIRONMENT
The Government is still planning to introduce new legislation and implement the remaining Royal Commission’s recommendations. This new legislation will have a significant impact on the financial services industry and is expected in the next few weeks. Upon release, Funds will once again move into “review mode”, assessing current programs and re-prioritising delivery.
CHOICE PRODUCT REPORTING
APRA will be updating MySuper Heatmaps from December last year and will be issuing a revised version for June 2020, with updated information on fees and performance. The interesting development here relates to Choice Heatmaps, with an expected delay of a year or so. The Retail Funds have been identified as the most impacted by the Choice Product Reporting and no doubt this delay will suit their operations and provide further time to assess product offerings for rationalisation.
DATA COLLECTION & OUTCOMES ASSESSMENT
Following on from Choice Product Reporting, there was general discussion on Outcomes Assessment and how Funds should already have similar/and or same data points about their products as normal course of business. That certainly is the case for Funds with a dedicated Product team whose responsibility is to continually assess product benefits for value-to-membership and prospective members. The trick here is that the final APRA data requirements for Choice Products will have nuances of difference, compared to internal Fund reporting. Couple that with the Data Collection specifications and technology which has experienced delays in the rollout of the upgrade, and all of a sudden we are now looking at a greater complexity associated with this requirement.
LIQUIDITY & EARLY RELEASE OF SUPER BENEFIT
Liquidity is a hot topic at the moment and questions were put forward about the Regulators and how they are viewing liquidity. There is certainly a heightened focus on liquidity, with APRA and ASIC issuing a joint letter to Trustees on the matter. With respect to the new Early Release of Superannuation benefit, there will be continual monitoring and reporting by APRA which is expected to be maintained whilst this benefit remains available to Fund members. At this stage $7.5b is forecasted for withdrawal across the approx.1 million applications received. In the coming weeks, we can expect a Fund Level report to be made available by APRA regarding this benefit. The real interesting story here, is that if it wasn’t for the MAAS, MATS and Single Touch Payroll implementations, the Government would not have been in a position to model the impacts of such a benefit and determine a “best duration period” that supports both short term benefit to Australians with the least amount of long term impacts on retirement. There’s a big tick here across Government, Regulators and Funds on the call-to-action in mobilising these payments.
THOUGHTS ON THE NEXT 12 MONTHS
There’s a rich landscape of priorities and many challenges.
First thoughts go to Accountability. Apart from the immediate WFH impacts, what we are really talking about is the Financial Accountability Regime – FAR. This framework will crystalise the weight of responsibility on key organisational roles to ensure appropriate and transparent processes are in place, and carried out on both material decision making and day-to-day running of superannuation funds.
Next on the list is Communications, engaging with members and the technology that supports a level of agility to respond to varying circumstances for growth, retention and issue resolution.
And finally, we come to Data….can’t stress enough that prudent decision making is underpinned by readily accessible, near-to-real-time data. Technology is a key component, driven by appropriately skilled personnel with a wide range of expertise across the Industry.
Managing Principal – IQ Group
If you would like to find out how IQ Group can help your organisation, please email us at: email@example.com.
Under Super Early Release (SERS), the ATO approves the release of money from superannuation accounts. However, funds will be responsible for executing benefit payment requests. Payments will follow the established process for early release on compassionate grounds.
A key distinction to the current process is that SERS involves payments on a far greater scale (466,000 ATO approvals to date), a fast turn-around-time and reduced scrutiny of the reason for the payment.
While this process will no doubt assist many thousands of Australians suffering financial hardship, it unfortunately also increases the risk of fraud.
AUSTRAC is the government body that monitors suspicious financial transactions. In response to the coronavirus pandemic, AUSTRAC has made a rule under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF) to ensure that superannuation funds making ATO-approved payments don’t have to conduct additional customer verification under the AML/CTF regime.
This serves the purpose of speeding up the process for super funds, however it also creates additional opportunity for fraud to be successfully perpetrated in the form of unauthorised ATO approvals being issued. Responsibility remains with super funds to satisfy themselves that they are dealing with a bona fide application, whilst balancing the pressures to complete payment of monies to people in need.
This isn’t an academic or theoretical concern. Funds and government agencies have already detected attempts to defraud people of their super. An example of this is the ACCC has stated that scammers are cold-calling people claiming to be from organisations that can assist members to obtain early access to their superannuation account.
The super industry and the ATO must work closely together to ensure that fraud monitoring and detection systems continue to work well, safe-guarding member’s super. In particular, vulnerable Australians seeking to access their super are acutely at risk.
The protection in place includes funds having to notify AUSTRAC and the ATO of suspicious activity. For example, there may be some questionable bank accounts that are used multiple times. A process must be put in place across whole of the industry and government bodies, that identifies and “red-flags” these types of bank accounts. This action must be implemented asap to enable a quick response and provide the necessary protection of members’ money.
If you would like more information, please contact IQ Group at: firstname.lastname@example.org.
Senior Consultant Fraud and Regulatory Compliance – IQ Group
What a difference a month can make! Never in their wildest dreams would financial services companies have thought they would have the majority, if not all, of their employees working from home, online and in most cases doing it successfully.
In a swift few weeks, Covid-19 has seen companies scramble to find new ways of doing business to keep their ‘virtual doors’ open. It may not be ideal, and there has no doubt been teething problems, but it is primarily working.
So now that it is working, how can financial services companies use this as the push they needed to create new ways of operating? Now more than ever, they will want to be focusing not only on keeping their costs low but retaining their members and customers too. Sure, growth would be great, but at this point in time, just retaining your customer base goes a long way in enabling companies to stay afloat. And what about those companies that have some of their services delivered from offshore? Now that the world has closed, has the cost cutting and retaining profits for investors, left financial services companies in a vulnerable position?
Does the Covid-19 crisis open the door for businesses to rethink how they operate?
Our Covid-19 working arrangements have shown that you can do the majority of things working from home. This includes call centres and back office processing. Where previously the argument has been that a call centre and processing can only be run from an office where everyone is together, the Covid-19 situation has challenged this thinking.
For some this has become an opportunity to rethink their offshore strategy and they are now embracing the opportunity to set up at least a portion of their operations onshore; such as work from home call centres and processing. For some this new hybrid model which includes work from home solutions not only provides economic advantages, such as a reduction in office space; it also provides balanced working options for employees.
This new thinking is not limited to how we operate. It also extends to how we communicate.
Now is the time for financial services companies to increase communication and find new ways to help educate their members as well.
Research from the UNSW Centre of Excellence in Population Ageing indicates that by increasing members financial literacy, members demonstrate more positive behaviours when it comes to planning for their retirement.
By creating and producing online education material, members are provided with the information they need to take control.
At IQ, we want to embrace this change and continue to navigate new and different ways of working for our customers, our industry and for our people. Let’s find solutions that build trust and integrity and continue to prove why we are living in the lucky country.
The IQ Group is here to help and support you as you explore our changing world. If you would like to utilise our services, please contact us at: email@example.com.
The coronavirus and the need for funds to be able to meet liquidity as a result of the increase in financial hardship claims from superannuation is creating uncertainty and delay on planned fund mergers. The Government on the other hand has suggested that funds lacking cash may be forced to merge.
More than 600,000 super fund members have already registered with the ATO to seek early release of some of their super. These members are suffering from severe financial hardship due to COVID-19 and loss of income and are choosing to access their superannuation early to ease the burden – even through this might not be in their best long-term interests.
Medium-sized funds MTAA Super and Tasplan announced in November last year that they were intending to merge on October 1 2020. In late March 202, they said that they now plan to delay their merger by 6 months. This is due to the sustained market volatility as a result of Coronavirus and concerns about the supply of specialist services like outsourced project teams. Despite the new timeline, they emphasised that the decision behind the merger and the benefits to members of both funds remain unchanged.
With the increase in staff utilising work from home due to the virus, MTAA Super CEO Leeanne Turner has said: “We think extending the merger timeline will ease stress and help our staff better manage workloads and their personal arrangements.”
Tasplan CEO Wayne Davy has said “By extending our merger timeline, we can focus on getting members the service, advice, and support they need right now. That’s always been a priority for us, but now it’s more important than ever.”
The issues mentioned by these funds are also faced by other funds, and there may well be other funds planning to merge that will also have to delay until the pandemic is over.
On the flip side of Tasplan and MTAA’s choice to delay their merger, treasurer Josh Frydenberg wants APRA to consider forcing mergers of industry super funds that are suffering liquidity problems due to the emergency COVID-19 withdrawals by members.
Frydenberg has said “The government expects APRA to exercise those powers in circumstances where it is in the best interest of fund members to do so.”
While Frydenberg’s wishes are at the discretion of APRA, and nothing is set in stone. It is an interesting insight into what’s to come in the future of fund mergers in the time of Coronavirus.
A lot is going to depend on how many people receive benefits under the JobKeeper scheme – those who do might not be under as much hardship – and then don’t need to access their super. It’s interesting though that this new way of accessing super is available a few weeks before Jobkeeper starts.
If you have any questions about the impact of coronavirus on fund mergers or need any assistance, please contact IQ Group at: firstname.lastname@example.org.
As the world battles with the spread of the coronavirus, the importance of pandemic planning for financial service organisations including superannuation funds cannot be understated.
The IQ Group recently held an internal discussion on pandemic planning. We discussed the key advisery players for superannuation funds and administrators – Federal Government, State Governments, World Health Organisation and in particular the Australian Prudential Regulation Authority (APRA).
These organisations provide important advice and direction to help organisations manage through the pandemic. While Governments provide directions for the nation and individual States, APRA’s focus is specifically on financial services organisations including RSE licensees.
What should superannuation funds be doing?
· considering publicly available information on pandemic risks, health and hygiene measures as well as tools for pandemic business continuity planning
· execute their pandemic plan
· establish an internal pandemic planning group
· communicate regularly with employees, suppliers and APRA (APRA expect to be informed of any significant impacts on operations, customers and financial condition)
According to APRA. effective pandemic planning generally requires a cross-disciplinary approach involving, for example human resources, business continuity management, security areas, business units and risk management functions within the organisation.
Organisations should have:
· Identified their highest critical business functions
· Co-ordinate between locations and be flexible – different locations may have different needs
· Assessed potential financial impacts
· Assessed potential staffing impacts
· Investigated alternative working arrangements and processing arrangements
We have already seen a significant number of financial services employees shift to working from home, which helps protect employees health, keep the organisation running, and is in line with the advice from the Federal and State Governments.
From our discussion it became clear that it is not the case of one size fits all – organisations need to be adaptable and continuously review and update their plans to cope with radiply changing circumstances.
In addition to various publications from Australia’s Governments (Federal and State), APRA has Prudential Practice Guide – CPG 233 – Pandemic Planning (May 2013) and the Association of Superannuation Funds of Australia (ASFA) has a Best Practice Paper on Pandemic Planning (Updated March 2020). These documents are a useful tool for trustees to navigate through this situation.
If you need help understanding pandemic planning and the available resources, please email IQ Group at: email@example.com.
Senior Business Analyst