The Australian Securities and Investments Commission (ASIC) has been told that rather than seeking to issue new guidance on Product Disclosure Statements (PDSs), the underlying legislation should be changed to ensure consumers received greater clarity around fees and costs.
The Association of Superannuation Funds of Australia (ASFA) has filed a highly pointed submission with ASIC arguing that formal legislative and regulatory effort is needed to address longstanding fee disclosure issues.
“ASFA’s strongly preferred approach would be for Treasury to undertake a comprehensive review of the intended policy outcomes and legislative provisions, in place of the on-going, piece-meal approach that ASIC has been forced to adopt in order to address the underlying legislative issues,” the submission said.
It said the primary purpose of PDS disclosure was to allow consumers to compare products, including direct fees and indirect costs that they might be exposed to.
“The starting point to achieving consistency and accuracy is for clear requirements in the primary legislation and supporting regulation,” the ASFA submission said.
It went on to say that it believed the differences in the fee disclosure requirements for superannuation funds and managed funds were unnecessary, did not appear logical and might prove to be counter-productive.
“Applying separate requirements makes it difficult for consumers to compare these products and for product issuers to manage these disclosure obligations efficiently,” the submission said. “It is not clear to ASFA what is the policy objective for the differences. As a result of the differences, disclosure practices will diverge rather than achieve a level of consistency that should be the policy objective.”
“ASFA is not is not confident that total investment related fees and costs will be disclosed consistently across the industry as a result of these changes,” it said.
