By Jim Bulling and Anabelle Weinberg
1. New requirements for Australian Superannuation Funds in relation to unlisted assets
The Australian Prudential Regulation Authority (APRA) has revoked Prudential Standard SPS 530 Investment Governance and issued a new version which will commence on 1 January 2023.
The following are the key changes to SPS 530:
- Stress testing – superfund trustees must undertake a comprehensive stress testing program which will be required to be approved by the Board and integrated into the superfund trustees investment governance framework.
- Valuations – superfund trustees will be required to establish a more comprehensive valuation governance framework including a Board approved valuation policy that addresses valuation risk for unlisted assets.
- Liquidity management – superfund trustees’ liquidity management plan will be required to outline the roles and responsibilities of persons involved in the management and oversight of liquidity risk and outline the key metrics to be reported to, and periodically reviewed by the Board. A superfund trustee will also be required to implement liquidity stress testing of unlisted assets as part of its comprehensive stress testing program.
Trustees will need to engage with General Partners and managers of unlisted trusts to ensure the above requirements can be satisfied.
2. New rules on the way for Buy Now, Pay Later
The Australian Government is looking to implement stricter regulation for the buy now, pay later (BNPL) arrangements under the National Consumer Credit Protection Act 2009 (Credit Act).
The Australian Government has identified an unintended regulatory gap which they believe has created the potential for consumer harm due to the absence of key protections available under the Credit Act.
The options paper released by the Australian Government has presented three scenarios for tighter controls:
- Stronger industry self-regulation with the addition of an “affordability test” requirement which will involve checking a consumer’s credit score as a proxy of their credit risk.
- Partially bringing BNPL into the Credit Act and requiring providers to be licensed. BNPL providers would be required to assess that a BNPL credit is not unsuitable for a person, scaled to the level of risk of the BNPL product or service.
- Regulate BNPL entirely under the Credit Act in line with credit cards and other credit products.
Submissions for this consultation are open until 23 December 2022.