Independent expert Darren McShane has begun his review of ASIC’s controversial RG97 reporting regime for superannuation fund costs after being appointed last week.

Mr McShane, until recently regulatory chief for the Hong Kong pooled pension funds regulator, where he led the development of the regulation of the Hong Kong pensions system, has also had extensive experience with ASIC.

He served with the organisation from 1990 to 2002, developing and implementing new legislation for managed investments and and financial services governance.

The review was called after ASIC’s new rules on super fund cost reporting were hit by claims from industry funds and independent experts that they advantaged for-profit retail funds. After initially defending the changes, ASIC backtracked at the end of October and searched for an acceptable independent expert to review the situation.

Objections to RG97 centred around concerns it would under-report the costs of retail funds using  investment platforms, making their costs look lower than they actually are.

While Mr McShane’s review is under way, ASIC appears to be taking a flexible approach to cost reporting, saying it will ensure funds do their best to comply with current rules.

The regulator said it “expects that funds will endeavour to comply with the current legal requirements in good faith and not mislead consumers about fees and costs. ASIC will continue to monitor disclosure to consumers.”

Funds have greeted the appointment of Mr McShane positively.

“The Australian Securities and Investments Commission continues to adopt a pragmatic approach ensuring that fee and cost disclosure is meaningful and accurate for members. The upcoming review is welcome, as is the appointment of Mr McShane,” Industry Super Australia chief executive David Whiteley said.

“The aim of the this review is to ensure that legislative modifications and regulatory guidance issued by ASIC will best meet in practice the objective of improving fees and costs transparency for consumers,” ASIC said in a statement.

Australian Institute of Superannuation Trustees CEO Eva Scheerlinck welcomed the appointment of an external expert with international experience in regulatory and policy and reiterated AIST’s support for ASIC’s review. “Other jurisdictions have been grappling with the challenges of tackling fee and cost disclosure in financial products, so an international perspective from Mr McShane on what works and what doesn’t will be very useful to the review,” Ms Scheerlinck said.

Ms Scheerlinck said while AIST supported the objective of RG 97 to provide greater transparency and comparability of super funds, profit-to-member funds remained concerned that the current disclosure requirements were overly complex at member level, were not applied consistently across asset classes, and were not applied evenly across the industry. This made it difficult for consumers to compares apples with apples.

Mr McShane’s review is expected to be completed in the first half of 2018. It will The review will consider the value of information about costs for consumers in their decision making processes, the extent to which this assists consumers in comparing products and the practicalities and expense of providing fee information, ASIC said.