The culture of performance and fee comparison that the MySuper product dashboard will bring about in the coming years, poses a grand opportunity for funds to advertise their relative successes.

The Australian Securities and Investment Commission is closely watching for any misleading product comparisons, it would prefer if funds did not emphasise short term performance success, but Greg Tanzer, commissioner at ASIC,  admits such charges will be difficult to prove.

“So many different people can take it so many different ways, so to be able to establish that something like that is misleading or deceptive is hard.”

Funds should be communicating long term performance, fees and whether a fund suits their investment appetite, he says, rather than what has reached the Morningstar rating for a short-term period.

“For a normal managed fund it makes perfect sense to talk about yours being the best performing for the year, but for super, which many people will not be accessing for 20-30 years, it does not make nearly as much sense. But there will be a group of people who will produce league tables and no doubt the people who are ranked in the top 10 will want to promote the fact.”

Another area of concern is adverts that offer incentives, such as a holiday or cash, to switch funds.

“It is certainly the sort of thing we think is irresponsible and has no place in this sort of industry, as it is offering an inducement which has no relevance to the type of product you are offering.”

Fines

The $10,000 dollar fine handed out to MediaSuper in December for a fact sheet which compared the benefits of its fund to a self-managed fund was deemed to be misleading has led to much fear of how funds promote themselves.

Speaking privately some lawyers have speculated that ASIC are now on a mission to fine financial services providers, where in the past they would have been happy to hand out a warning.

This is a misconception, says Tanzer. The number of fines has risen in recent years he admits, but largely due to ASIC being handed greater powers over who and what it can fine. However, once a new piece of regulation has been thoroughly communicated and bedded-down there is a greater willingness to fine for any transgressions.

“Once we think a reform has been in place for long enough the industry should be in a position to understand,” says Tanzer. “So it would be somewhat irresponsible if we did not take enforcement action to prove that point.”

Product dashboard

At the opposite end of the spectrum some super funds have incurred the displeasure of ASIC by putting links to their product dashboard in unobtrusive positions on their website.

“For this to work we are keen that it should be as prominent as possible,” says Tanzer.

Another concern has been the absence of any mention of past-performance from Mysuper funds that have started from scratch. ASIC wants new funds to inform members that such data will eventually follow.

Tanzer says: “Our preference would be that you should tell why it has been omitted. We would like people not to be surprised when they start seeing this information, the course  of information is important to see.”

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