ASIC has extended the transition period for trustees of superannuation funds and responsible entities of managed funds and other managed investment schemes (issuers) to comply with updated fee and cost disclosure requirements in relation to product disclosure statements (PDSs).
The transition period will now end by 30 September 2017 for issuers that notify ASIC in writing by 31 January 2017 that they intend to take advantage of this extension in relation to a PDS, and provide ASIC, before 1 March 2017, information about the fees and costs that would be required to be included in this PDS had they complied with the updated fees and costs disclosure requirements.
Issuers that do not want to take of advantage of this extension will have to comply with the updated requirements by 1 February 2017. Any issuer that has already adopted the updated requirements will not be required to provide ASIC this information.
The facilitative approach ASIC published previously (see ‘Questions and answers – fees and costs disclosure – superannuation and managed investment products‘) will apply for those issuers that opt in to comply before 1 October 2017 until that date. We encourage issuers to adopt the updated requirements as early as possible to provide greater transparency to consumers about their fees and costs, noting that the information for each product provided to ASIC will not be published in a manner that would identify the issuer of each product.
ASIC has extended the transition period in response to applications from industry associations which had raised concerns that information provided for some products by an earlier date may not be reliable and may not assist consumers in comparing fees and costs.
In deciding to extend the transition period, we have reminded these associations there has been a significant transition period to comply and made clear this extension is final.
ASIC will be amending ASIC class order 14/1252 Technical modifications to Schedule 10 of the Corporations Regulations [CO 14/1252] to give this extension effect shortly. We will also publish instructions and the forms to provide ASIC with the above information by issuers seeking to take advantage of the extension. Notification that an issuer wants to take advantage of the relief in relation to a PDS must be made in writing to firstname.lastname@example.org.
ASIC intends to use the information to check that the issuers are taking reasonable steps towards compliance and to identify whether the disclosures indicate any likely non-compliance. We will not take enforcement action based on errors in the information provided to us unless we identify that the issuer is intentionally providing information that is not complying or has failed to take reasonable care or is not taking reasonable steps from this time.
The extension of transition does not provide an exemption from the requirements that apply under the Corporations Regulations, unamended by [CO14/1252] or the requirement for the issuers not to make misleading or deceptive statements about their products. The extension does not apply in relation to periodic statements.
ASIC Commissioner Greg Tanzer said, ‘ASIC is committed to ensuring that fees and costs disclosure is accurate, and provided on a consistent basis, to assist consumers when making decisions about their superannuation and managed investments.
‘We have agreed to an extension of the transition period to ensure that consumers can rely on more accurate information when issuers comply with our guidance.
‘ASIC will continue our extensive engagement with industry during the extended transition period to assist industry in its implementation of these measures’, Mr Tanzer said.
Following extensive consultation, ASIC published revised guidance and law amendments in relation to fees and costs disclosure for superannuation and managed investment product in November 2015 (15-350MR). The publication followed ASIC’S review of fee and cost disclosure practices in Report 398 Fee and cost disclosure: Superannuation and managed investment products (refer: 14-158MR), which identified inconsistencies in industry practice and under-disclosure of fees and costs. In addition to revising our guidance and clarifying the regulatory requirements, the report highlighted the need for complementary industry standards or guidelines to help improve the quality of disclosure.
© Australian Securities & Investments Commission. Reproduced with permission.