The updated version of Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97) explains how product issuers and platform operators should disclose fees and costs.
ASIC Commissioner Danielle Press said consistent and comparable disclosure helps consumers and their financial advisers to better understand the fees and costs involved, compare products more easily and make more informed assessments about whether a product is suitable for the consumer.
“The updated RG 97 will provide greater clarity on disclosure obligations for product issuers and platform operators, which should result in more transparent and useable fees and costs information being produced,” she said.
ASIC’s update of RG 97 follows public consultation after an external expert review of the regulatory guide as well as consumer testing of proposed changes to the presentation of fees and costs.
Key changes
The main changes to fees and costs disclosure are regrouping of values in the renamed fees and costs summary to more clearly show fees and costs that are ongoing and those that are member activity based; a simplification of ongoing fees and costs into three groups – administrative, investment and transaction; including a single “cost of product” figure in a PDS; and simplifying how fees and costs are presented in periodic statements.
Also, the guidance and associated legislative instrument have been drafted to make the regime more practical for industry and promote compliance by issuers with their legal obligations.
The guidance has separate sections dealing with superannuation and managed investment products;
Modification of the legislation has been done by way of a legislative instrument that includes a consolidated version of Schedule 10 of the Corporations Regulations 2001.
The costs categories that need to be counted in the disclosed amounts have been clarified, including confirming that some categories that are hard to accurately measure consistently and have limited value for users need not be included (e.g. implicit market costs).
“We expect the changes to RG 97 will help address some previous industry concerns, deal with some practical issues and offer guidance for more effective disclosure,” commissioner Press said.
“While disclosure has its limits, transparent fees and costs are important for the proper functioning of the market and product issuer accountability. Effective fees and costs disclosure supports better decision-making by consumers and the advisers who assist them,” Ms Press said.
The new disclosure requirements in updated RG 97 will apply to all PDSs issued on or after 30 September 2020.
Periodic and exit statements with reporting periods commencing from 1 July 2021 must comply with the new requirements. However, where a fund is ready, an early opt-in is available for reporting periods commencing from 1 July 2020.
The existing requirements under ASIC Class Order 14/1252 and the transitional version of RG 97 will continue to apply until the end of the transition period.
However, industry should note that the updated version of RG 97 released today will provide clearer guidance about those existing fees and costs disclosure requirements that have not changed.
Separately, ASIC will undertake focused work on fees and costs disclosure on platform arrangements in 2020. We will also work with industry bodies to clarify how financial advisers should use fees and costs information when giving advice.
ASIC will also monitor fees and costs disclosure going forward and consider taking action where we find misconduct.
