In case you missed it - time period extended for RG97 Compliant Periodic Statements

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Through updating their Q&A on the ASIC web-site ASIC informed us that on 21 December 2017 they updated certain aspects of ASIC Class Order [CO 14/1252] (Class Order) to extend the time period for super fund PDS and super fund and managed investment scheme Periodic Statements to comply with the Class Order.

Before the December 2017 update to the Class Order, it provided for certain disclosure obligations in relation to periodic statements for both superannuation funds and managed investment schemes for reporting periods prior to 30 June 2018 to operate differently to the disclosure obligations applying on or after 30 June 2018.  Similarly, CO 14/1242 also permitted superannuation trustees to deal with property costs in PDSs given before 30 September 2018 by disclosing these in the “Additional Explanation of Fees and Costs” section rather than including these as part of the investment fee.

ASIC intended these staggered start dates to be interim arrangements allowing trustees and responsible entities time to change internal systems and industry time to with ASIC how to calculate property costs.

In early December 2017, a number of industry bodies representing a range of sectors in the superannuation and managed investments industry requested further extensions for compliance with CO 14/1252 given the status of the expert review and the potential for industry to incur material costs implementing the new disclosure requirements while the outcome of this expert review is unknown.

Appreciative that the external expert review creates uncertainty for industry about the fees and costs disclosure regime, ASIC intends the latest modifications to CO 14/1252 to minimize further costs in relation to system changes so costs are only incurred in relation to implementing the fees and costs disclosure requirements that emerge after ASIC’s consideration of the expert review’s recommendations.

ASIC has stated the effect of the modifications is to preserve the status quo at law for a longer period for superannuation PDSs and periodic statements (for both superannuation funds and managed investment schemes) where the last date the periodic statement is required to be given is on or after 1 January 2018. This is designed to ensure that there is clarity about the fees and costs regime before additional systems changes need to be developed and implemented. ASIC will consider whether amendments should be made to CO 14/1252 after the completion of the expert review.

The modifications were made by AISC on 21 December 2017 by ASIC Corporations (Amendment) Instrument 2017/1138.

ASIC has previously stated it will not look to take action against a responsible entity if they are making reasonable endeavours to comply with the fees and costs disclosure requirements in CO 14/1252, RG 97, the Corporations Act and the Corporations Regulations.

ASIC expects that managed investment schemes will:

  • endeavour to comply with the current legislative requirements in good faith and not mislead customers about fees and costs;
  • be as transparent as possible and not make disclosures that give a false impression about fees and costs;
  • not make any changes to existing PDSs that render the fee and cost disclosure less compliant; and
  • accurately categorise and disclose fees and costs, particularly in relation to direct costs as the data for this disclosure should be readily available to the responsible entity.

ASIC summarized the modifications relevant to Managed investment schemes as:

Disclosure documentRequirement Relevant CO 14/1252 referenceRelevant Corporations Regulations reference
Periodic statementsWhere the last date by which the periodic statement is required to be given is on or   after 1 January 2018, interim arrangements for tax deductions and transactional and operational costs (including buy/sell spread) apply for a reporting period ending on or before 29 June 2018.Subparagraph 6(j) and 6(l)301(6) and 303(2)(d)