‘While ASIC is trying to get this right, this is a missed opportunity for consumers,’ says super industry head.
New guidelines for the disclosure of superannuation and management fees will leave fund members more confused than enlightened, says Industry Super Australia.
While Australian Securities and Investments Commission (ASIC) is attempting to improve transparency of fees in super funds, critics say it doesn’t go far enough towards fixing many long-standing issues.
“We know this has been a lengthy process, and while ASIC is trying to get this right, without law reform they can’t fix it. This is a missed opportunity for consumers,” said Industry Super Australia’s head of research, Dr Nick Coates.
ASIC’s updated Regulatory Guide 97 (RG 97) is important in improving transparency, but does not deliver the clarity consumers need to make informed decisions on fees and cost comparisons, says Dr Coates.
“We needed to see the banks’ super fund platforms product costs all in one place so consumers could compare them against cheaper-run funds,” says Dr Coates. “Instead, we have ended up with a situation where they are expected to volunteer to provide example disclosure – it’s fanciful.”
The updated guide features a number of new groupings that clarify some fees and costs, but fails to provide a ‘net returns measure’ which would allow consumers like-for-like comparisons across funds and products.
Dr Coates says that another issue not addressed in the guide could lead to consumers believing some products are initially less expensive until they are hit with additional fees and charges on top of what the guide states are necessary to disclose on entering a fund.
“While we welcome steps taken by ASIC to improve transparency when it comes to fees and costs, this latest guide doesn’t go far enough when it comes to providing clear and simple comparisons between the bank products and other super funds, and we worry this will impact APRA (Australian Prudential Regulation Authority) heatmaps that are based on RG 97,” says Dr Coates.
“The only way consumers can have confidence they are comparing apples with apples is to use a net returns measure. This catch-all figure means they can see exactly what they will be earning, after fees and costs.”
Do you think your super fund is fully transparent with fees and charges?
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