The Federal Government is threatening to impose a single fee disclosure formula on the superannuation sector following the failure of the two key industry groups to reach agreement.
The Investment and Financial Services Association announced in early April that negotiations with the Association for Superannuation Funds Australia over a single fee measure for superannuation and managed funds had “reached an impasse on several fundamental issues”.
But with the Government indicating that a formula is likely to be imposed on the two groups if they fail to reach agreement, ASFA has indicated there may yet be room for compromise.
At the same time, IFSA’s chief executive Richard Gilbert has made clear that consensus was reached between the two organisations “on several key guiding principles”.
Gilbert says his organisation presented a compromise, single bottom line model, including a separate fee impact statement, which it believes is transparent and easy for consumers to understand.
“The model clearly outlines in both percentage and dollar terms what consumers pay initially and for advice, and what they pay each year for administration, investment management and ongoing advice,” he says.
Discussing the ASFA model, Gilbert claims it is based on complex assumptions, including an assumed initial balance, an assumed salary, an assumed contribution rate, an assumed earning rate and an assumed discount rate.
“It doesn’t provide transparency around what consumers are paying for advice, administration and investment management,” he says.
