Super fund product marketers will have to provide a far more detailed disclosure of fees and charges in their promotional material than before under the Financial Services Reform Act (FSRA), a leading lawyer has warned.
Clayton Utz senior associate Lawrence Hastings says while the FSRA, which takes effect on March 11, allows some transition time, all departments responsible for Product Disclosure Statement should already be preparing for the changes.
He says the FSRA requires that a fund must disclose fees, such as any contribution charge, direct account charge, exit charge or switching charge, and must outline the circumstances under which these may be increased.
The ongoing management charge for each identified investment strategy must also be expressed as a percentage of the fund’s assets. This percentage must be disclosed for the most recent year and the previous four years, and must be broken up between the portion of the fee relating to the management of the assets and the portion not relating to the management of assets.
In addition, trustees will have to disclose the effects of the ongoing management charge on a notional account balance of $10,000 to enable comparison with competing products.
