Superannuation trustees and responsible entities should be braced for revised guidance from ASIC on fee and cost disclosure in FY2015. In recently issued Report 398 Fee and cost disclosure: Superannuation and managed investment products, ASIC reports that its review of fee and cost disclosure practices of superannuation and managed investment product issuers indicates that there are significant variations (including under-disclosure) in the disclosure of fees and costs. ASIC reports the main causes of variation include the treatment of fees and costs associated with investing through underlying investment vehicles, quality of data used for calculating fees and costs, disclosure of fees net of income tax, the different practices used in estimating performance fees, and incorrect treatment of some management costs as transaction costs. ASIC states it has already published its views (in ASIC Regulatory Guide 97 (RG 97) and Information Sheet 197 (INFO 197)) on certain of these issues as follows:
- fees and costs associated with investing through underlying investment vehicles should be disclosed;
- fees should be disclosed gross of tax;
- performance fees should be disclosed based on reasonable estimates.
ASIC foreshadows a review of RG 97 through a consultation process, which will likely result in revised guidance and modifications to the law by way of class order(s) in FY2015. A copy of each of Report398, Information Sheet 197 and RG 97 are available on ASIC’s website. ASIC has also announced it will continue with its facilitative approach to compliance with fee and cost disclosure requirements until 1 July 2015 for superannuation funds and managed investment schemes