ASIC today released an information sheet on fee and cost disclosure requirements for superannuation trustees.
The requirements are part of the Government’s Stronger Super reforms which start 1 July 2014, and must be met for both superannuation products and managed investment schemes.
Information Sheet 197 Fee and cost disclosure requirements for superannuation trustees (INFO 197) clarifies ASIC’s expectations on the calculation of indirect costs and how performance and advice fees should be disclosed.
As part of the disclosure requirements, the consumer warning that states, ‘Your employer may be able to negotiate to pay lower administration fees’ must be included in superannuation products’ PDSs. Issuers of managed investment products do not need to include the statement in their PDSs.
ASIC’s facilitative approach to compliance with fee and cost disclosure requirements has been extended to 1 July 2015 for superannuation funds and managed investment schemes. ASIC will take a measured approach where inadvertent breaches arise or system changes are underway, provided that industry participants are making reasonable efforts to comply.
Further, ASIC has deferred by class order [CO 14/541] the operation of section 29QC of the Superannuation Industry (Supervision) Act 1993 until 1 July 2015 so it can consult further with industry on the application of this section.
Section 29QC states a super trustee must use the same calculation when providing information to a person or on a website as it does when giving the same or equivalent information to the Australian Prudential Regulation Authority (APRA) under a reporting standard.
ASIC reiterates that APRA’s Reporting Standard SRS 700.0 Product Dashboard (MySuper) continues to apply regardless of this deferral of section 29QC. Trustees will need to refer to this reporting standard for the elements of the product dashboard. This includes the return target information in the dashboard.
Further, reporting fee and cost information will still be required under APRA’s Reporting Standard SRS 703.0 Fees Disclosed regardless of the deferral of section 29QC.
As an additional deregulatory measure, ASIC has also made changes to its PDS in-use notice forms to remove the questions relating to superannuation fees that were previously included.
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Background
ASIC Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97) will be updated in the next financial year. Consultation with industry on issues including double counting of fees and costs and the level of look-through required with regards to indirect cost ratio calculations will also take place at that time.
Further guidance, including FAQs, can be found on ASIC’s superannuation pages.