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ASIC wants good faith compliance on fees and costs

The Australian Securities and Investments Commission (ASIC) is looking to hold fund managers to account on RG 97 irrespective of ongoing consultation around finalisation of the arrangements.

At the same time as releasing a further consultation paper this week, ASIC said that it was currently focused on whether issuers were “endeavouring to comply with the current legislative requirements and RG 97 in good faith and not mislead consumers about fees and costs”.

In doing so, it said ASIC would be continuing to monitor disclosure and advertising and that “any strong claims" about low fees that were misleading would “be treated very seriously, and we will continue to intervene against inadequate disclosure”.

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ASIC said the approach would continue until any changes to the fees and costs disclosures were finalised and in force.

The regulator’s warning came as it acknowledged that it had again extended the compliance deadline to 2020 to allow further consultation.

At the same time, ASIC acknowledged that if and when the Government’s Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 and the Treasury Laws Amendment (Corporate Collective Investment Vehicle) Bill passed the Parliament further changes might be necessary to the fees and costs disclosure regime.

It said that if the Government’s legislation, currently held up in the Senate, were to pass the Parliament it might “have significant impacts on the proposals set out in this paper”.

 




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I had a scan through the 92 page release by ASIC yesterday on this. They are going to carve out property operating costs, direct that is, meaning industry funds will be protected. I assume unlisted infrastructure will be the same. The report says it is likely too complicated for consumers to follow and that the performance ( unit price) will reflect the costs. Well that's fine, then they should also mandate how valuations are driven and time periods for such. And some consumers may well be very interested in the costs so why not allow that at some secondary level. And if those costs are too complicated, why not do away with all cost disclosures and just allow the Unit price performance to dictate returns, where all costs are included in the unit price. As an adviser how do you meet BID on fee competitiveness when the document itself explains the significant complexity and multiple versions of how certain costs are dealt with and that overseas they are still very much experimenting with the same? If I was sued under BID I would use the ASIC document as evidence of the complexity and lack of transparency to defend myself.

Phil, agree with your comments. Quite concerning that ASIC would breach its charter of consumer protection by carving out such a large component of 'fee disclosure' on such weak reasons. Likewise it appears a breach of public trust and their very reason for existence that they appear to be doing so to favour one segment, the ISA, whom they have blatantly protected in the past, and biased Kell has publically stated he had no real intention to investigate any aspect of their operations.

Industry Funds have 6-12 Investment options with only 17 investment platforms being Hesta, Australian Super, Legal Super etc,

One Retail Super Wrap Account 401 Management investment options plus the ability to buy any direct share on the ASX - model portfolios. I could cherry pick a model portfolio with a look back view that outperforms very industry funds for dust.

Its the same old chestnut but there are to many options to compare but some how the industry funds have yet again compared the pair - this information should be open to the public

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