RG 97 review
The external review by Darren McShane into Regulatory Guide 97: Disclosing fees and costs in PDSs and periodic statements (RG 97) was completed in July 2018. ASIC has published Mr McShane's report, Report 581 Review of ASIC Regulatory Guide 97: Disclosing fees and costs in PDSs and periodic statements.
If you wish to contact ASIC in relation to the review, please email ASIC at firstname.lastname@example.org.
- What does the report conclude?
- What happens now the review is complete?
- What was the timeline for the review and what are the next steps?
- Who conducted the review?
- What were the terms of reference of the review?
- What industry consultation was undertaken during the review?
- What issues were raised during the review?
RG 97 sets out ASIC's guidance on how to disclose fees and costs in PDSs and periodic statements for superannuation funds and managed investment schemes. The legal requirements for disclosing fees and costs in PDSs and periodic statements are set out in Schedule 10 of the Corporations Regulations 2001 (Cth) (as modified by ASIC Class Order [CO 14/1252] (CO 14/1252)).
On 1 November 2017, in response to strong feedback from across industry around challenges with the implementation of ASIC Class Order CO 14/1252 and RG 97, ASIC announced it would appoint an external expert to conduct a review of the fees and costs disclosure regime to ensure that it is best meeting in practice the objective of greater transparency for consumers.
The report concludes that changes to the fees and costs disclosure regime would be advantageous, and includes discussion of:
- the way fee and cost information is presented to consumers; and
- some of the information to be included in this disclosure.
ASIC welcomes Mr McShane's report as a comprehensive analysis of the fees and costs issues arising under the Australian regulatory framework.
ASIC agrees that changes to the fees and costs disclosure framework are in the interests of consumers and industry.
ASIC is keen to ensure that any changes are practicable for industry while providing transparency and useable comparability for consumers.
ASIC has carefully considered the recommendations made in the report and on 8 January 2019 released Consultation Paper 308 Review of RG 97 Disclosing fees and costs in PDSs and periodic statements, which seeks feedback on ASIC’s proposals to make changes to the fees and costs disclosure regime. For more information on the consultation, see RG 97 consultation.
ASIC has decided to extend its current compliance approach to the fees and costs disclosure requirements until the consultation process is completed and any changes to the fees and costs disclosure requirements are finalised and in force. For more information, please refer to Question 1B of ASIC's fees and costs disclosure Q&A.
ASIC has also extended the time periods for compliance with certain aspects of CO 14/1252. For more information, please refer to Question 1C of ASIC's fees and costs disclosure Q&A.
1 November 2017
28 November 2017
24 July 2018
8 January 2019
The review was conducted by Darren McShane.
Mr McShane has extensive experience in the superannuation and managed investments industry, including most recently as Chief Regulation and Policy Officer and Executive Director of the Mandatory Provident Fund Schemes Authority in Hong Kong, where he led the development of the regulation of the Hong Kong pensions system. Mr McShane was also the Chairman of the International Organisation of Pensions Supervisors Technical Committee.
The aim of the review was to ensure that the guidance and legislative modifications issued by ASIC for fees and costs disclosure in relation to superannuation and managed investment products are best meeting in practice the objective of greater transparency for consumers. While the review was to consider RG 97, it could lead to a consideration of the principles and law on which RG 97 is based.
The review was expressly required to involve a consideration of the law, existing policy settings, business practices in the industry, international experience, interaction with the Australian Prudential Regulation Authority’s (APRA) data collection obligations and industry stakeholder concerns.
The key considerations identified for Mr McShane to analyse were:
- the value of the information currently required to be provided in PDSs and periodic statements in relation to fees and costs and whether this assists consumers in making an investment decision;
- the extent to which the current fee and cost regime results in disclosure which assists consumers (including by contributing to market analysis) in comparing superannuation and managed investment products;
- the practicalities of producing information required for disclosure of fees and costs under RG 97, including the cost to consumers of doing so, as well as whether it might lead to decisions adverse for the long-term interests of consumers; and
- how the legislative modifications and guidance outlined in RG 97 could be amended to improve clarity and ease of implementation.
Mr McShane was provided with all written submissions received by ASIC in relation to previous consultations on drafts of CO 14/1252 and RG 97.
In order to seek feedback from industry and to identify the issues industry are experiencing with CO 14/1252 and RG 97, Mr McShane met with over 120 industry stakeholders in Sydney, Melbourne and Brisbane and via teleconference. ASIC attended all of these industry stakeholder meetings as an observer.
These stakeholders included industry bodies, research houses, industry advisers, service providers and representatives from the managed investments and superannuation industry who Mr McShane identified as appropriate to assist him in understanding the issues arising in relation to RG 97 from a cross section of all parts of industry. For efficiency and timing reasons, it was not possible to arrange meetings with all persons who may have had an interest in the review.
A full list of the stakeholders that Mr McShane met with during the review is set out in Appendix 1 of the report.
The issues and concerns that industry stakeholders raised with the fees and costs disclosure regime during stakeholder meetings are listed in Appendix 2 of the report.