Revisions to superannuation and investment product fee estimation methodology as a result of RG 97 is expected to significantly lift average fee metrics, according to an industry survey.
According to the EY survey based on participants who attended recent seminars EY hosted, 24% expect fees to rise more than 50 basis points, 37% expect fees to rise 20-50 bps and another 37% expect fees to rise 5-20 bps.
The survey results affirm the view that the more detailed fee diagnostics and definitions imposed through RG 97 will lead to sharp rises in disclosed fees. These rises will reverse much of the perceived fee drops that resulted over the past two years due to the FOFA and MySuper reforms.
EY noted that in their view, the regulator is fully aware RG 97 will have these impacts but believes that fees in themselves should not in any case be the prime filter for choosing a super fund or investment.
"The changes will improve transparency and lead to fairer competition. ASIC is aware the requirements may make some products look more expensive, but suggests that cost is just one factor that investors consider. They [consumers] also evaluate products based on asset allocation, investment strategy and performance," EY wrote in a recent review note.
EY added, however, that there are still major implementation issues to be overcome and that funds and investment operators need to be prepared for this new reporting regime.
Of the EY seminar participants, only 2% of them believe they have completed this process. This illustrates how complex the issue has become, even if almost two thirds believe they have their implementation under control.