Key report recommends RG 97 fee comparator facility
An independent report into fee disclosure arrangements around the Australian Securities and Investment Commission’s RG 97 has recommend that the regulator undertake a feasibility study into the creation of a publicly-accessible fee comparator facility based on information extracted from Product Disclosure Statements.
The report, compiled by independent expert, Darren McShane, has also recommended that ASIC work with industry to improve consistency in the way that fee information is set out in fee templates and that consistency is also injected into the way fee information is incorporated into PDSs.
The report has also recommended that superannuation fee template be modified to group together those fee and cost items that are ongoing separately from those that are dependent on member-initiated transactions, and the removal of the “advice fees’ in the fee template for superannuation products, where the amount is nil.
McShane’s report noted that many concerns had been raised about how fee disclosure tools applied to platforms and that many of the concerns were long-standing.
“Because of their more complex structure, disclosure for Platforms is always going to be more complex than for non-Platform products,” it said. “RG 97 includes various warning and safeguards that should assist in ensuring that consumers are aware of the need to aggregate the two levels of disclosure.”
The report made four recommendations which it suggested that, if implemented, would assist in achieving fee and cost disclosure for Platforms that was functionally, substantially similar to that for managed investment schemes (MIS) and superannuation products.
It said fee Template differences would be moderated by showing key fees and costs of accessible MIS within the Platform’s investment menu documents in tabular format and through greater consistency in the location and expression, in the Fee Template, of the warning that the fees and costs of the Platform relate to access to the investments on the list, not the costs within those investments.
“Extension of abbreviated Fee Examples (the “Cost of Product” calculation) to Platforms, including accessible MIS, would be important as this is the most relevant comparison point for consumers and their advisors,” the report said.
“For periodic statements, obligations should be extended to include the costs impacts of accessible investments in Platforms.”
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