AFA News 10 June 2021. In December 2018, APRA announced that they would be undertaking a review of the Sole Purpose Test. At that time we were very pleased to see them make this announcement, as we were of the view that there was too much uncertainty and that given the existing guidance was dated February 2001, it was time to do a review and provide more guidance. Financial advisers have a number of questions about the application of the Sole Purpose Test. This issue became even more relevant in the context of the April 2019 joint APRA/ASIC letter on charging advice fees from super accounts.
Senator Slade Brockman, Chair of the Senate Economics Committee asked a question of APRA on the status of this review on Wednesday 2 June 2021, during the Senate Estimates hearing. The answer from APRA was that they had put this review on hold due to the Your Future, Your Super legislation, suggesting that the “best financial interests” requirement may have removed the need for further guidance. This is a very disappointing outcome, as we do not believe that the Your Future, Your Super legislation has any material impact on the Sole Purpose Test and in no way does it reduce the need for improved guidance on the charging of advice fees from superannuation accounts.
Please click here to see a video of the discussion on the Sole Purpose Test.
Senator Ben Small from WA also asked a set of questions during the Senate Estimates hearing about the state of the life insurance market, large life insurance premium increases and upfront premium discounting practices. Please click here to see a video of this discussion at Senate Estimates.
Last week, answers were released from Questions on Notice that were put to APRA by Senator Brockman following the March Senate Estimates hearing. These questions addressed issues like the scale of premium increases, the impact of the APRA Intervention into IDII on small business owners, trustee responsibilities with ongoing advice fees and the impact of upfront premium discounting practices.
Please click here for a copy of the answer to the APRA Question on Notice.
Issued 10.06.2021. AFA Policy & Education Update