TAER regime might prove counter-productive
The decision to follow the Cooper Review's recommendation to pursue a Total Annual Expense Ratio (TAER) regime may prove counter-productive in terms of better informing superannuation fund members, according to industry specialist Brett Elvish.
Elvish, the director of Financial Viewpoint, told the Conference of Major Superannuation Funds (CMSF) that the new TAER regime represented a push down the road of further prescription.
"It places a band-aid on something that requires radical surgery," he said.
Elvish said it represented a worrying policy which seemed destined to create further distortions.
He said that the whole problem with the TAER regime which had emerged from the Cooper Review was that a little knowledge had proved to be a dangerous thing.
Elvish said there was a need to start again with an alternative disclosure regime and removed capital market distortions.
Sunsuper chief investment officer David Hartley had earlier pointed to the degree to which financial institutions could give the appearance of a fee-free environment, with the common feature being the addition of intermediaries.
He said that there was a need for disclosure to focus on net returns and what each of the intermediaries were extracting.
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