Super fees and charges to become easier to understand from September

Significant changes are expected in terms of the process of disclosing fees by superannuation and managed investment funds. They will become more transparent and easier to understand for consumers starting September 30.

The new requirement follows the Australian Securities and Investments Commission (ASIC) in ensuring there is no inconsistency in the way charges and fees are listed by funds. It will soon become easier for consumers to understand what they are paying for and how much they are paying for.

The changes will help bring consistency to details that must be available in the product disclosure statement (PDS). Later in 2018, the changes will ensure that the information in consumers’ periodic statements and in PDS will match more clearly.

Ultimately, the upcoming new changes to reporting seek to ensure that consumers will be able to have a better understanding of fees and costs. More accurate disclosure of fees will also help guarantee that funds are competing more fairly.

The ASIC noted that the fees consumers are being charged with may reflect their type of investment. Some higher cost investments bring higher returns in the long term. Consumers will be able to identify easier if this will be the case with the new requirement.

According to a media release published at its site, the ASIC stated that it will make amendments to provide more certainty around the relevant requirements. It will also perform compliance checks to guarantee that funds are meeting their obligations.

Furthermore, the ASIC has extended the deadline for disclosure of property operating costs in the investment fee or indirect costs to September 2018 following extensive consultation with industry on the introduction of these changes. The extension will help make additional time for the ASIC to discuss how to calculate these fees with the industry.

The deadline for specific disclosures in periodic statements that require changes to the internal systems of funds is also extended. The extension will ensure that the changes can be made in a cost effective manner. Those requirements will have effect for annual statements for the year ending on June 2018.

The changes to reporting arise from ASIC's concerns with inconsistency and under-reporting of fees. The issue was investigated in Report 398 Fee and cost disclosure: Superannuation and managed investment products, which identified some main issues. These include under-disclosure of fees and costs associated with investing indirectly through other vehicles and tax treatment of fees and costs.