The Association of Superannuation Funds of Australia Ltd. will meet with the Financial Services Council this month or next to begin formulating a joint position on how much of Australia’s $1.8 trillion fund management industry’s investments should be disclosed.
ASFA and the FSC plan to submit their final report on fund disclosure to regulators by the end of June this year, says Pauline Vamos, chief executive of ASFA.
“If better disclosure is to apply to the whole industry then cost-benefit analysis must be done,” says Vamos.
“Full disclosure at first blush does not seem the appropriate way forward,” she says.
The impetus for better disclosure by funds is a “personal initiative” of Australian Securities and Investment Commission chairman Greg Medcraft, says FSC CEO John Brogden.
Medcraft has investments with AustralianSuper, the $42 billion fund. He telephoned AustralianSuper’s call centre and asked about his investments. The call was not dealt with satisfactorily.
Based on that experience Medcraft has since pushed Brogden and Vamos to work on ways to bolster their members’ disclosure beyond simply stating asset allocation.
The ASIC spokesman declined to comment.
“AustralianSuper is suuportive of portfolio disclosure and has posted on our website our top holdings in our Australian and international shares as well as our top property and infrastructure assets,” says AustralianSuper.
“This information is updated regularly. We continue to work to enhance our level of investment disclosure that will help members make better investmetn decisions,” says the fund.
ASFA’s members, which are retail, corporate, government and industry funds, manage about $928 billion. FSC’s members include superannuation funds, fund managers and life insurers as well as financial advisers.
Vamos says ASFA is speaking with fund managers and trying to determine what they “are capable of” disclosing.
“We support greater disclosure but how many people will want to use it?” asks Vamos.
“Is the listing of hundreds of pages detailing every single security a fund has relevant? What should the timing of disclosure be? There are intellectual property issues,” she says.
With the pool of superannuation money forecast to rise to $3 trillion by 2020 and $5.5 trillion by 2030, Australians will want to know about how their money is managed, says Brogden.
“But we have to guard against having so much information that superannuation is confusing,” he says. “That will turn off rather than engage people.”
Government reviews of superannuation have recently focused on costs.
“It would be ironic that efforts to boost disclosure may lead to higher costs in the middle of a reform process that is focused on cutting costs,” says Brogden.