ASIC’s new fee disclosure rules won’t directly increase underlying costs for members, but the “appearance of a large hike in fees” will present headaches for super funds, says Rice Warner.
Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements will come into force on 30 September 2017 after extensive negotiation between the super industry and ASIC.
The new rules will require trustees of super funds to provide the corporate regulator with granular fee data, including trading costs such as buy-sell spreads, property management costs and margins on derivatives contracts.
Data collected under the RG 97 regime will be included on the new MySuper product dashboard, which has been designed to make it easier for members to compare MySuper products.
Research house Morningstar sent a note to clients this week noting that disclosed fees are likely to increase in many cases as a result of RG97 – something that is "expected to create marketing and communications challenges for some industry participants".
Super industry consultant Rice Warner noted that while underlying costs and net returns to members have not changed, the "appearance of a large hike in fees presents major communications challenges".
Unlisted assets such as infrastructure will be the "hardest hit" by the new rules, said Rice Warner.
"We question whether the treatment of unlisted assets will increase transparency and comparability," said the consultant.
"Business management activities of listed infrastructure businesses are included in the cost structure of the business – in Australia and worldwide.
"In contrast, business management costs of unlisted infrastructure assets are swept up in the RG 97 dragnet if they are incurred within interposed vehicles. This potentially gives the appearance of much higher costs for unlisted assets than would be presented if the same assets were listed."
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