The Association of Superannuation Funds of Australia (ASFA) will push for two key matters to be incorporated into ASIC’s guidelines for full disclosure on super fund asset holdings, as the June deadline approaches fast.
“We’ve been doing a lot of work on the level of risk disclosure, and how you calculate risk and how you disclose risk is a very important aspect to include,” ASFA chief executive Pauline Vamos said.
Vamos said a volatility measure is another focus for the disclosure guidelines.
“I would [propose] issues like the volatility measure to have very clear disclosure in terms of how a type of asset class behaves, particularly cash, and it should be the number one priority to be frank,” she said.
The standard risk measures carried out by the joint working group of ASFA and the Financial Services Council (FSC) has been released as a draft but will require an assessment in 12 months for its submission as a revised document.
FSC chief executive John Brogden said the risk regime will be put into place to ensure that companies use the same phrases to describe the different levels of risk.
“Standardising the language is critical,” Brogden said.
“ASFA and FSC worked together and got a great outcome so that’s demonstrative that we’ve been able to do that as an industry.”
He said the FSC are highly supportive of the disclosure initiative as it will not only improve transparency but have the ancillary benefit of increased member engagement with their superannuation.
“We’re quite confident that we’ll see it at a sector level. The issue is [whether] there’s a benefit of going deeper.”
As the superannuation industry faces Stronger Super legislative reforms, the Future of Financial Advice (FOFA), new risk measures and the start of a product disclosure statement regime, Vamos said a workable starting date for the disclosure guidelines is a matter of consultation.
“This is important but it’s not something that we’d like to see mandated this year. While discussions must take place, we’ve really got to look at what the other priorities are across the industry,” she said.
Despite Australia’s poor disclosure ranking in the Organisation for Economic Cooperation and Development (OECD), Vamos said a number of industry funds have a very high level of disclosure already and warned an outcome of “death by disclosure” if a full list of every underlying security and investment was required.
“Nothing would indicate that there’s been a spurt in requests,” she said.
“There has been a reaction by consumers against fairly large disclosure documents, 100 to 300 page prospectuses, we’ve had the in the past.
“Documents with every single type of possible disclosure are not necessarily effective when it comes to disclosing the key elements that most people want.”
