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Record number of financial complaints in 2023
The Australian Financial Complaints Authority (AFCA) has reported a record number of complaints of over 100,000 in calendar year 2023, an increase of 23% on 2022.
“The volume of complaints escalated to AFCA has been increasing at an unsustainable rate,” AFCA chief ombudsman and chief executive officer, David Locke said.
Of great concern to AFCA is the almost doubling in scam-related complaints between 2022 and 2023.
AFCA registered 8,987 complaints related to scams, an increase of 95% from 2022. Complaints involving financial hardship rose 29% to 5,396.
“We are also seeing the impact of increased interest rates and cost of living pressures, with complaints involving financial hardship also significantly higher,” Locke said.
The most complained about product in 2023 was personal transaction accounts, while the most complained about issue was unauthorised transactions.
Penalty units set to rise again
In the Mid-Year Economic and Fiscal Outlook 2023–24 (MYEFO) the government announced it plans to increase the amount of the Commonwealth penalty unit by 5.4% from $313 to $330. That follows an increase from $275 to $313 on 1 July 2023 and represents a 83% increase since 2017.
As a result of this latest increase, SMSFs need to be aware that most administrative penalties will increase from $16,500 (60 penalty units x $275) to $19,800 (60 penalty units x $330).
The increase would mean failure to prepare your SMSFs financial accounts and statements could incur an administrative penalty of 10 penalty units, at a cost of $3,300.
Under superannuation law, the Australian Taxation Office (ATO) can apply penalties for reasons including:
- lending to members or relatives (with exceptions): 60 penalty units
- borrowing (with exceptions): 60 penalty units
- failing to comply with in-house asset rules: 60 penalty units
- failing to keep minutes: 10 penalty units
- failing to keep records of changes of trustee: 10 penalty units
The MYEFO said the increase would commence four weeks after passage of the relevant legislation.
Super Consumers Australia gets government funding
The Albanese Government has provided funding to Super Consumers Australia to become a superannuation advocate for consumers. The grant provides $5 million over 5 years from 2023–24.
Super Consumers Australia will represent members in policy development and support better member understanding of the superannuation system.
“We want consumers to have a strong voice on their super,” Assistant Treasurer and Minister for Financial Services, Stephen Jones, said.
“Having an independent advocate to government and industry will deliver better outcomes for members. We want people to retire with more money, so we’re making sure the super system is as strong as it can be.”
Northern Trust Asset Management fined for misleading investors
Northern Trust Asset Management Australia has paid $29,820 to comply with two Australian Securities and Investment Commission (ASIC) infringement notices regarding alleged false and misleading statements about the application of a Carbon Emissions Exclusion Screen.
ASIC says the Product Disclosure Statements (PDSs) of Northern Trust’s NT World Green Transition Index Fund claimed to exclude companies that ‘derive 5% or more of their total annual revenues (either reported or estimated) from thermal coal-based power generation’ and have a score of 3 or 4 in the low carbon transition management score quartile.
ASIC alleged the information in the PDSs was misleading because the Carbon Emissions Exclusion Screen was not properly applied.
“ASIC was concerned that investors may have been misled by statements that certain energy companies would be excluded, when they were not. In this case, the exclusions and screenings were outsourced to a third-party company without significant oversight by Northern Trust,” ASIC deputy chair Sarah Court said.
Loose diamonds not collectable assets
In response to a recent question, the ATO has said natural diamonds (including pink diamonds) are not considered collectable or personal use assets when held in loose form under the superannuation legislation. As such, they do not have specific storage and insurance requirements.
“Trustees and auditors should note these rules only apply for ‘diamonds held in loose form’,” the ATO says.
“This means the diamond cannot in any way be mounted, integrated into or used as an item for adornment or other purposes which would be inconsistent with the holding of the diamond in loose form for investment purposes.”
But the ATO still recommends trustees hold adequate insurance and use appropriate storage arrangements for these types of assets.
Draft legislation released for climate reporting
The Albanese Government has released draft legislation on climate-related financial disclosure for large businesses and financial institutions.
The Exposure Draft legislation seeks to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities.
“Our changes will establish Australia’s climate risk disclosure framework, giving investors and companies the transparency, clarity and certainty they need to invest in new opportunities as part of the net zero transformation,” Treasurer Jim Chalmers said in a press release.
This proposed legislation is designed to help investors and companies make more informed investment decisions and lay the foundation for a stronger, more robust financial system, Chalmers said.
Submissions will close on 9 February 2024.