ASIC has updated its guidance to superannuation funds and issuers of managed investment products on fees and cost disclosure, with a suite of new requirements set to apply from late-2020.
The corporate regulator released an updated version of Regulatory Guide 97 Disclosing Fees and Costs in PDSs and Periodic Statements (RG97) on Friday, which simplifies how fees and costs are presented in periodic statements and now includes a single "Cost of Product" figure in product disclosure statements.
The update to RG97 requires super funds and managed investment product issuers to re-group values in the re-named fees and costs summary to more clearly specify which fees and costs are on-going, and which are based on member activities. Fees and costs will also be categorised into three groups (administrative, investment and transaction) in a move designed to enhance simplicity.
The new disclosure requirements will apply to all PDSs from September 30 2020. Periodic and exit statements with reporting periods commencing from July 1 2021 will be required to comply with the new requirements, while those with reporting periods starting from July 1 2020 may opt-in early if the fund is ready.
Existing requirements under the current version of RG97 will apply until the end of the transition period, ASIC said.
ASIC commissioner Danielle Press said the more consistent and comparable disclosure the update to RG97 delivers will help consumers and financial advisers better understand the fees and costs involved in super funds and investments products, enabling them to make more informed decisions about the suitability of a product.
"The updated RG97 will provide greater clarity on disclosure obligations for product issuers and platform operators, which should result in more transparent and useable fees and costs information being produced," Press said.
ASIC said the guidance and associated legislative instrument were drafted to make the regime simpler and more practical for industry and to promote compliance by issuers, with Press adding the changes should address industry concerns, deal with practical issues and offer more guidance "for more effective disclosure".
"While disclosure has its limits, transparent fees and costs are important for the proper functioning of the market and product issuer accountability," Press said.
"Effective fees and costs disclosure supports better decision-making by consumers and the advisers who assist them."
ASIC said its next step would be to focus on fees and costs disclosure on platform arrangements next year, with industry bodies set to work with the corporate regulator to clarify how financial advisers should use fees and costs information when giving advice. ASIC added it would monitor fees and costs disclosure and consider taking action where it found misconduct.
Rainmaker head of superannuation research Jason Ross noted the changes include calculating fees based on a $5000 contribution, which he said may affect transaction costs if a fund has buy-sell spreads or different unit prices for applications and redemptions.
"The existing example of a $50,000 investment will need to include a contribution of $5000," Ross said.
"The $5000 contribution would capture any buy-sell spreads, switching fees or any other fees and costs."
The regulator proposed many changes - including the single cost of product requirement - in its response to Report 581, Darren McShane's review of RG97 earlier this year.
Responding this afternoon, the Financial Services Council said it welcomed several of the changes to RG97, with FSC chief executive Sally Loane describing ASIC's update as a "positive step forward for Australians".
However, Loane said the council remained disappointed that its request for a longer timeframe for compliance had not been granted, noting its submission earlier this year "pressed strongly" for more time.
"We submitted that this was necessary to accommodate the extensive system, data gathering and disclosure changes - the shorter timeframe will create added pressure and risk for businesses implementing the new rules," Loane said.
"The FSC looks forward to engaging with ASIC over the coming months to ensure industry has a disclosure framework that provides transparent, comparable information and promotes consumer trust and confidence in the financial services system."