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ASIC set to backflip on superannuation fees reporting rules

Regulators will review their decision on superannuation fee reporting.

Regulators will review their decision on superannuation fee reporting. Photo: Getty

The Australian Securities and Investments Commission is due to backflip on controversial changes in superannuation fund fee disclosure which have been in force only since the beginning of October.

The regulations, known as RG97, are the result of a multi-year consultation process that ASIC introduced to ensure super fund investors are given accurate and comparable figures on fund fees.

After initially defending the changes against criticisms they advantaged for-profit retail funds, a spokesman for the regulator on Friday told The New Daily: “Some aspects of RG 97 are being reviewed and more detail will be revealed in coming days.”

Those “aspects” refer to provisions which industry super funds and private research groups argue make retail funds look artificially cheap by avoiding disclosure of some of their investment fees.

The criticisms were first raised when ASIC released details in late August.

Any changes resulting from ASIC’s review are expected to be introduced early next year.

ASIC’s decision to revisit RG97 appears to leave some elements of fund regulation in confusion.

ASIC deputy chair Peter Kell told a Senate estimates committee on Thursday: “We have delayed the start date for a lot of elements of RG97. We want to make sure we get all elements of this right.”

However, a number of super funds have already started reporting their fees in line with the new regulation which research house Chant West said would add about 0.19 percentage points to the investment costs of the average super fund.

Chant West research chief Ian Fryer said ASIC’s decision to review RG97 was positive.

“We’re very supportive of ASIC looking more closely at the disclosure regulations as it could lead to more accurate disclosure and be helpful to fund members,” Mr West said.

David Whiteley, CEO of Industry Super Australia, said the move was “very welcome”.

He added: “It reflects well on the regulator that they are going to take time to give further consideration to regulation of fees disclosure.”

A spokesman for Revenue and Financial Services Minister Kelly O’Dwyer said decisions about the design and implementation RG97 were a matter for ASIC.

Opposition superannuation spokesperson Katy Gallagher said: “It’s essential that the requirements for disclosure of fees and costs are applied fairly and transparently across superannuation funds.

“We are aware of the concerns that have been raised and we strongly support a regime which creates a level playing field and allows fair comparison across funds.

“It’s a shame it’s taken this long but there is clearly more work to be done by ASIC,” Senator Gallagher said. 

The dispute over fee reporting is driven by the size of the funds in play. Retail funds have about $420 billion invested through platforms, the investment structures carved out by ASIC in RG97.

Platforms are investment structures that hold members’ funds while also allowing them to choose different investment options below the platform level.

The industry super funds movement is concerned that the regulation would make those funds look more attractive, disadvantaging its $545 billion under management.

Mr Fryer said the issue would be resolved if ASIC chose to regulate fee reporting in all investment classes in the same way.

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