OPINION | Sometimes it is good to pause and assess. ASIC has worked with industry for some time to bring greater consistency and transparency to reporting of fees and costs.
But even after Regulatory Guide 97 commenced, we received strong feedback from across all sectors of the industry that the practical implementation was challenging and complex. We also heard that it may not be achieving the goal of transparent and comparable disclosure for consumers.
We took this feedback seriously.
In November 2017, we appointed Darren McShane as an expert to conduct a review of the fees and costs disclosure regime in RG 97 to ensure that it is meeting its objectives.
We expect the release of a public report in the first half of 2018.
Progress of the review
In December, McShane started considering the law relating to fees and costs disclosure, existing policy settings, and business practices within the superannuation and managed fund industry.
Since commencing the review, he has met with a wide range of stakeholders to understand the issues with the preparation and use of information on fees and costs. These stakeholders have included those in the investment management industry, research providers, industry advisers, and representatives from all sectors of the superannuation industry.
The next stage, from March, will involve further stakeholder engagement on issues of detail, plus an opportunity for broader feedback from stakeholders with whom McShane has not been able to meet individually. This may involve a multiparty feedback session hosted by ASIC and/or written submissions. Details of our approach will be made public.
We recognise the importance of conducting this review swiftly and thoroughly. While we are keen to receive McShane’s recommendations, we are also participating in much of the stakeholder engagement. This is helping us stay up to speed with progress and the direction the review is taking. We want to minimise the period of uncertainty in relation to the fees and costs regime by responding to the review’s recommendations as quickly as possible following their release.
Status quo in the interim
To minimise implementation costs while the outcome of the review is unknown, ASIC has decided to preserve the status quo by extending for one further year the time for compliance with aspects of the disclosure regime that were due to come into force within the next nine months. These aspects are the disclosure of property operating costs, borrowing costs, tax deductions and buy/sell spreads in periodic statements the disclosure of property operating costs in product disclosure statements for superannuation funds. This extension was in response to a request from a number of industry bodies representing a range of sectors.
While the review is in progress, ASIC’s facilitative compliance approach continues. This means we are focused on seeing that responsible entities and trustees act in good faith and do not mislead consumers.
For further information about any aspect of the review or fees and costs disclosure requirements or to register your interest in providing feedback, please contact us by emailing [email protected]
We also maintain a Fees and Costs disclosure Q and A page on our website.
We appreciate that the review means more time spent on fees and costs disclosure issues but it is far from ASIC’s aim to drive industry and consumers to focus only on fees and costs – we are aware that other information is also important.
Once the review is complete, we will carefully consider experts’ recommendations and, if necessary, make adjustments to the regime. We want to do what we can to make the Australian fees and costs disclosure regime clear for industry while meeting the overriding need to achieve better outcomes for consumers.
Jane Eccleston will discuss ASIC’s RG 97 Review at the 2018 Investment Magazine Investment Operations Conference, to be held on February 20, at The Westin, Sydney. For details, visit www.investmentoperations.com.au