Consumers need more rather than less information on fees and costs when it comes to selecting superannuation products and will be well-served by receiving the assistance of a financial planner, according to the Financial Planning Association (FPA).
The FPA used a submission responding to an Australian Securities and Investments Commission (ASIC) discussion paper on disclosing fees and costs in product disclosure statements (PDSs) to argue that it should not be assumed that consumers will be overwhelmed by too much information.
The FPA submission argued that much of the current problem encountered by both consumers and advisers was the inconsistent approach of financial product manufacturers.
“… the biggest challenge of advisers at present is the inconsistent approach by which product providers are disclosing their fees which inhibits financial advisers’ ability to clearly compare costs of financial products,” it said.
The FPA submission noted that, for this reason, the ASIC consultation and review “is the right step to rectifying this problem”.
“However, it remains incumbent on ASIC to ensure product manufacturers always disclose fees and costs in a clear and consistent manner,” the submission said.
However, the FPA argued that it would be to assume that consumers needed cut-down information on superannuation such as a single illustrative account balance figure.
“The FPA believe overtime, specific changes such as banning of exit fees, increased financial literacy, and technological innovation that reduce barriers to searching and switching, are fundamental reasons why consumers may increasingly rely on disclosure data,” it said.
“The changes to disclosure of fees and costs should consider this future landscape of more engaged superannuation users. Hence, the FPA is concerned the use of a single figure $50,000 in a ‘Cost of Product’ template will not adequately represent future users of superannuation.”
“Therefore, despite concerns that additional information may clutter product disclosure statement, we believe additional comparative figures will play a vital role in driving product comparability and competition,” the FPA submission said.