ASIC identifies inconsistencies in fee disclosure
Superannuation funds risk falling foul of new legislation due to inconsistent fee and cost disclosure practices, an Australian Securities and Investments Commission (ASIC) report reveals.
The report found that many funds did not look beyond the first layer of fees in the underlying investment vehicle they invest through, ignoring the costs association with investing through external investment structures, and could mislead consumers.
ASIC commissioner, Greg Tanzer said it was essential that the financial services sector provider consistency in relation to the disclosure of fees and costs.
"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," he said.
"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."
The report noted that the disclosure of management costs was "an area of significant concern" for the regulator.
David Haynes, policy and research manager at the Australian Institute of Superannuation Trustees (AIST) welcomed ASIC's decision to focus on the practice of "fee gaming" and the need to protect consumers against super funds that hide or deliberately under-disclose their fees and costs for market advantage.
"This much-needed further strengthening of fee disclosure will ensure consistency and transparency of approach across all products and sectors of the industry," he said.
Haynes said AIST had particular concerns about products that were promoted as ‘low-fee' or ‘no-fee' products, when the fees were simply hidden.
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