Temporary no-action position for expanded intra-fund advice on early release of superannuation relating to COVID-19

Application

The no-action position outlined below applies in relation to trustees of regulated superannuation funds. It is issued on 14 April 2020 and initially was to expire on 24 September 2020. However, due to the Government’s extension of the superannuation early release scheme, this no-action position has been extended and will expire on 31 December 2020.

Introduction

As part of its COVID-19 economic response package, the Government introduced measures to allow eligible individuals who have been financially impacted by COVID-19 to access their superannuation early, up to $10,000 in 2019-2020 and a further $10,000 in 2020-2021 (COVID-19 early release scheme).

Access to quality advice is important for consumers to decide whether they should take the significant step of accessing their superannuation early.

For many Australians, the first place they will seek assistance is from their superannuation fund. Most superannuation funds provide free general advice and some provide personal advice at no charge to the member on a limited range of superannuation issues (known as intra-fund advice).

To facilitate the provision of timely advice to consumers on the COVID-19 early release scheme, ASIC is issuing a temporary ‘no-action’ position to superannuation trustees. The purpose of this no­-action position is to confirm that, in the circumstances and subject to the conditions below, ASIC will not take action in relation to personal advice about the COVID-19 early release scheme provided as intra-fund advice on the basis that it breaches s99F of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

The temporary expansion of intra-fund advice has been allowed in the context of exceptional circumstances. It forms part of a broader package of ASIC measures to increase access to financial advice during the COVID-19 pandemic.

ASIC also notes that, as outlined below, trustees can provide considerable assistance to their members without needing to rely on this no-action position.

What trustees can do to help without relying on the no-action position

ASIC notes the following ways that trustees can help their members in relation to the COVID-19 early release scheme and ASIC expects trustees to take appropriate actions to meet their members’ needs:

• direct members to useful sources of government information, such as ASIC’s Moneysmart website and ATO information about the scheme;
• provide factual information about assistance, such as the application process and the various Government programs that may also address financial hardship;
• make them aware of the services of financial counsellors;
• provide general advice (for instance, members may have substantially less saved for retirement as a result of withdrawing their super early);
• provide personal advice charged to the fund as a whole (intra-fund advice) that is within the terms of s99F of the SIS Act.

Trustees providing advice as outlined above need to be appropriately licensed or alternatively have arrangements in place with a licensed advice provider.

For more information about what constitutes advice consistent with s99F of the SIS Act, see INFO 168.

Where more might be needed: no-action position on expanded intra-fund advice

ASIC acknowledges that the COVID-19 situation is exceptional. The current regulatory settings may not always allow for a member to be given sufficiently holistic advice about accessing the COVID-19 early release scheme at a cost to the fund rather than the individual member. In particular, intra-fund advice may not allow the financial position of the member’s household to be taken into account.

From 14 April 2020 until 31 December 2020 (inclusive), ASIC does not intend to take regulatory action against the trustee of a regulated superannuation fund solely for failure to comply with s99F where all of the following apply:

1. personal advice is provided by the trustee, or another person acting as an employee of, or under an arrangement with, the trustee;
2. the advice is directly focused on advising the member on whether the member should access the COVID-19 early release scheme and is not about other topics or subject matter; and
3. the advice addresses the following as relevant for the member:
• the member’s need for the early release of superannuation monies (e.g. cashflow and budgeting relevant for the member)
• government benefits available to the member (e.g. JobKeeper Payment, income support payments, household support payments, etc.)
• the member’s alternative sources of support or relief (e.g. loan or rent relief, existing financial resources and access to the COVID-19 early release scheme from another superannuation fund)
• the impact on the member’s retirement income by accessing the COVID-19 early release scheme,

including making reference to household circumstances as needed to provide appropriate advice to the member.

This no-action position is subject to the conditions stated below.

Relying on the no-action position

The no-action position only applies where all of the following conditions are met in relation to the advice provided in reliance on the no-action position.

1. The trustee must inform ASIC that it will rely on the no-action position by emailing super.enquiries@asic.gov.au. The trustee must do this either before first relying on the no-action position or within 30 days of first relying on it.
2. The member must have sought the advice rather than the trustee or other relevant provider initiating the advice;
3. Before providing the advice, the advice provider must:
   • determine that, in the advice provider’s opinion, the member is likely to be eligible for the COVID-19 early release scheme;
   • clearly describe the scope of the advice;
   • make the member aware of relevant public factual information and existing general advice of the fund concerning the COVID-19 early release scheme;
   • confirm that notwithstanding this information and the advice, the member wishes to seek more advice;
4. If a trustee engages an external provider to provide the advice, this must be done at a cost to the fund consistent with the trustee’s best interest duty and in line with the expectation that the only advice to be given is directly related to whether to access the COVID-19 early release scheme.

Further important information

The no-action position only relates to s99F of SIS Act. Personal intra-fund advice is still personal advice, and the requirements of the Corporations Act 2001 (Corporations Act) still apply, except where other related ASIC measures have given relief.

This means that appropriate records must be kept and provided to members. However, the advice provider may be able to take advantage of other temporary COVID-19 related relief that allows a record of advice rather than a statement of advice to be given (see ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355).

ASIC wishes to draw the attention of trustees to the importance of members receiving quality advice that complies with the best interests duty and related obligations in Div 2, Pt 7.7A, of the Corporations Act.

In accordance with the general Australian Financial Services (AFS) licensee obligations, ASIC would expect that there is evidence of appropriate resources, training, procedures and controls to ensure the delivery of quality advice that is consistent with the terms of this no-action position.

ASIC will continue to monitor the appropriateness of the no-action position, having regard to the ongoing impact of COVID-19. ASIC intends to undertake surveillance activity later this year to ensure that the advice provided in reliance on this no-action position is consistent with this no-action position and applicable legal obligations, including the duty to act in the best interests of members.

ASIC has confirmed that APRA has no objection to the approach outlined in this position having regard to the way in which APRA will administer the sole purpose test.

Status of no-action position

This no-action position is given in accordance with our policy in Regulatory Guide 108 No-action letters (RG 108). That is, it is not a legal opinion; it is an expression of regulatory intent and is specific to the facts and circumstances.

For further information, see RG 108 and, in particular, RG 108.33.