ASIC media releases are point-in-time statements. Please note the date of issue and use the internal search function on the site to check for other media releases on the same or related matters.
14-158MR ASIC reports on fee disclosure practices for super and managed investments
ASIC today released a report on our review of fee and cost disclosure practices in the superannuation and managed investment industry.
ASIC undertook a review in order to understand the practices used by industry and to identify any gaps which may lead to underreporting of fees and costs.
The Government’s Stronger Super reforms relating to fee and cost disclosure, which came into effect on 1 July 2014, have a substantial impact, particularly for super trustees and to a lesser extent managed investment issuers. This gave ASIC an opportunity to explore the effect of these reforms and any difficulties the industry has encountered in applying the necessary changes.
With the assistance of industry we identified a number of issues which have a substantial impact on how fees and costs are disclosed.
The report identifies:
key issues where inconsistent disclosure of fees and costs occur, including non-disclosure of fees and costs relating to investment in underlying investment vehicles, incorrectly disclosing fees net of tax and inconsistent disclosure of performance fees
ASIC’s view on proper disclosure with regard to the key issues identified, and
further work that ASIC will undertake to assist industry in meeting its fee and cost disclosure obligation. This work will include providing industry further guidance, modifying the requirements in the law to make it clearer and less costly to comply with and encouraging industry to develop standards that build on our guidance.
The review of fees and costs disclosure practices is an important piece of work for ASIC that will assist us to ensure investors are confident and well informed.
Commissioner Greg Tanzer said, ‘It is crucial for super and managed fund issuers to disclose fees and costs on a consistent and comparable basis in order for consumers to make meaningful comparisons between products.
‘Our review shows that there is some inconsistency at the moment and we will work with industry to improve fee and cost disclosure more generally’.
ASIC acknowledges the assistance of those organisations that provided input during the review.
Report 398 Fee and cost disclosure: Superannuation and managed investment products (REP 398)
ASIC has recently released Information Sheet 197 Fee and cost disclosure requirements for superannuation trustees (INFO 197) on fee and cost disclosure requirements. We intend providing further guidance after further industry consultation by revising Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97).