ASIC Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements will end up making it “impossible” for Australians to compare the fees of industry and retail fund, argues Industry Super Australia.
The new fee disclosure rules for super funds, which will apply from 30 September, are the result of months of negotiations between ASIC and the financial services sector.
ISA chief executive David Whiteley said RG 97 was designed to “inject greater transparency into the often murky world of indirect investment fees and costs which are unwittingly borne by consumers” – but it will not fully apply to retail investment platforms.
“Inexplicable carve-outs to the new RG 97 rules exclude investments via platforms favoured by bank-owned super funds and also can result in direct investments in infrastructure and unlisted property looking more expensive – while actually costing the investor less – than an investment in the exact same infrastructure or property asset through a listed vehicle or platform,” Mr Whiteley said.
The comments echo superannuation consultant Rice Warner, which said last week that listed infrastructure firms often include their management activities within their cost structure.
Mr Whiteley continued, “These carve outs make it almost impossible to achieve consistent and accurate fee and cost disclosure, denying investors the opportunity to accurately compare the products available to them and determine whether a particular product represents value for money.
“Thus, not only will this bamboozle consumers it could, if not fixed, change investment strategies of funds resulting in less direct illiquid investments, and ultimately lower returns to members.
“Consumers should be able to compare super funds on both performance and cost and charges, but the RG 97 exemptions will make this impossible.”
