The Australian Securities and Investments Commission (ASIC) will be taking a targeted surveillance approach to how superannuation funds undertake intra-fund advice, with particular regard to disclosure and transparency.

The focus falls under the regulator’s facilitated-compliance approach as My Super kicks in at the beginning of July, according to Gerard Fitzpatrick, senior executive leader for investments and superannuation at ASIC.

“We want to ensure that the fees that are reported are the kinds of fees that are actually being charged. We’ll be looking at issues around transparency and appropriateness of the fee disclosure,” he said. “And this is something we’ve flagged earlier that we would do after the implementation of Stronger Super, because there are obviously certain issues around the data provided being appropriate and correct.”

Funds now have greater clarification on “collective charging” and must comply with new rules on fee disclosure and what can be included in fees to members.

“The definition [of intra-fund advice] basically changes a bit now and it introduces this concept of collective charging in the Stronger Super legislation,” said Fitzpatrick, adding that ASIC has provided guidance on the regulator’s website.

The guidance on provision of intra-fund advice has emerged from a concern about funds’ difficulty complying, said Fitzpatrick.

“One of the expectations from the Stronger Super reforms was that, in addition to clarifying the obligations of super funds, they would also be trying to enhance the access to advice.”

However, Fitzpatrick said it’s less an issue about concerns and more an issue about clarification of the obligations.

“I think it was always a point within Stronger Super that they wanted to ensure that the mechanisms that were put in place fit in with the broader Strong Super reform process as a whole.”

Surveillance, disclosure and fees

In this context, surveillance generally means looking at a specific area and considering particular themes, from attending a business onsite and looking very closely at how an entity operates.

“From a surveillance perspective, we’re very interested in the disclosure. So the PDS, the types of information that are provided to members, their websites, their marketing and advertising, that they are not making exaggerated claims in their marketing and advertising.”

Fitzpatrick also flagged that funds should not be trying to encourage members to stay with a fund through some kind of advice mechanism or marketing if it’s not in the member’s interests to do so.

“And, certainly, we’re particularly interested in issues around fees and ensuring that the fees that are reported reflect the actual fees that are being charged,” he said.

“It’s just to make sure that funds are aware that we will be monitoring their implementation with regards to disclosure. It’s a nuanced message, because we are taking that facilitative compliance approach. We would expect that people are trying to implement it, so it’s an issue of ensuring that.”

From a regulatory perspective, Fitzpatrick said the regulator isn’t concerned about the type of business model a super fund adopts, so long as it’s meeting its compliance obligations.

“[It’s] just that they’re very conscious that they should separate out areas that are being collectively charged from those that are being charged individually. And the guidance is pretty clear about the types of things you can and cannot collectively charge for.”

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