Retail superannuation funds have been able to disguise the true cost of their products via the use of investment platforms, according to Industry Super Australia (ISA).
In a submission to the Australian Prudential Regulation Authority (APRA) responding to a discussion paper on superannuation reporting standards, the ISA pointed to platforms as being problematic.
It stated, "a fundamental problem with the fee and cost disclosure regime for indirectly held assets is that entities invested in via a platform at an investor's direction are automatically excluded from the definition of ‘interposed vehicle'."
"The retail superannuation sector typically provides its choice superannuation products through platforms. As a result of this exclusion, the fees and costs for retail superannuation products will appear less expensive than investments offered by funds that are not held via a platform," the ISA submission said.
It claimed that this would affect the accuracy of product disclosure statements (PDSs), periodic statements, and analysis by independent commentators which was based in part on fee information produced by superannuation funds.
"This is at odds with the policy objectives of improving the accuracy of disclosure of fees and costs, enabling consumers to compare true fees and costs across products and drive down fees," the submission said.
It said the ISA "has significant concerns about the Australian Securities and Investments Commission (ASIC's) proposed approach which undermine transparent, consistent and comparable fee disclosure" .
"ISA has made submissions to ASIC about these concerns and we are continuing to engage with ASIC about these issues and work towards satisfactory solutions. However, until this achieved, ISA does not support APRA's proposal for alignment between the information registrable superannuation entity (RSE) licensees are required to disclose in PDSs under the Corporations Regulations, as modifed by ASIC, and the information required to be reported under APRA's reporting standards," the ISA submission said.
Comments
Could someone please explain how ISA, manages to hide the cost of expensive advertisements run in the media without the approval of their members. Could the ISA explain how they are able to sponsor major sporting teams without the approval of the members. And finally, since they are not for profit, where does the money come from all this including their executive salaries unless they rip it out of the members accounts, without disclosure ?
It's a bit rich for Industry Funds to complain about disguised fees. Are these the same people claiming to manage super for $1.50 p/w and hiding MERS on page 37 (still can't find the performance fee details). They must be getting desperate to be running with this argument. Hypocrisy at it's finest. The money pit must be a bit too shallow these days for all the union hangers on to sponge from.
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