Industry Super Australia has warned that new superannuation fee disclosure rules could actually further confuse consumers.
ASIC has been consulting on proposed changes to Regulatory Guide 97 (RG 97), which provides guidance on the disclosure of fees and costs in PDSs and periodic statements.
“ASIC is committed to ensuring that consumers who actively seek information about fees and costs receive transparent and usable fees and costs information,” says the regulator.
But Industry Super Australia (ISA) says the, “long overdue”, changes don’t solve the problem, and could make it worse.
ISA Chief Executive Bernie Dean said: “The current proposal by ASIC only serves to reinforce the inconsistent and confusing fee disclosure structure – whereby platforms owned by banks and investment managers would only be required to disclose the cost of gaining access to a product, not the cost charged by those issuing the product.”
“This means consumers may believe these products are less expensive, while unaware they will then have to pay additional fees and charges on top of what has already been disclosed,” he sai.d
“Under the current ASIC proposal, all consumers will benefit from is empty rhetoric and more confusion.”
In its submission, ISA says it is not convinced that ASIC, “in its desire to finally settle RG 97”, has fully taken recent developments into account – including the passage of the Protecting Your Super legislation, and the reports of the Productivity Commission and Banking Royal Commission.
ISA argues that different disclosure requirements for different entities will mean consumers won’t be able to make ‘apples-for-apples’ comparisons, leading to members not being the key audience for data “but that experts will process cost information and provide various interpretations for consumer use”.
“Of particular concern, is a lack of action on the platforms exemption and the inconsistent treatment of property investments between real estate investment trusts (REITs) and super funds that invest directly in property ”
“We know that fee and cost categories can be gamed. An example of this can be seen with retail funds that currently choose to report no investment fees to APRA. A net returns measure cannot be gamed because charging, regardless of how/whether a fund chooses to label it, erodes the overall net return. A net returns measure would also be more consumer-friendly. Allowing consumers to compare products on a like-for-like basis would significantly enhance the likelihood of good decisions being made.”