Enhanced Fee Disclosure (RG97)
What is it?
Continuation of ASIC’s project to enhance fee disclosure in PDS. Responsible Entities can choose to opt-in to the regime from 30 September 2020 for PDSs. To opt-in, the RE must make a written record that includes the date of election and the PDS/product to which the election applies. Periodic and exit statements for reporting periods commencing on 1 July 2021 must comply with the new requirements.
What will OIG be doing?
Unless there is a compelling reason not to, any PDS issued in 2021 will opt into the new fee disclosure regime.
What OIG expects its managers to do?
Stay informed and work with OIG to prepare the costs disclosure in line with the revised RG97.
Summary
Responsible Entities can choose to opt-in to the regime from 30 September 2020 for PDSs and 1 July 2020 for periodic and exit statements. To opt-in, the RE must make a written record that includes the date of election and the PDS/product to which the election applies.
A key deadline is the requirement that periodic and exit statements with reporting periods commencing on 1 July 2021 must comply with the new requirements, meaning that the new requirements for exit statements will be triggered for exits on or after 1 July 2021.
The revised RG 97 requirements include:
- Re-grouping values in the re-named ‘Fees and costs summary’ to more clearly show fees and costs that are ongoing and those that are member-activity based;
- Simplification of ongoing fees and costs into three groups – Administration, Investment and Transaction;
- Inclusion of a single ‘Cost of Product’ figure in a PDS;
- Simplification of how fees and costs are presented in periodic statements;
- Requiring costs met using reserves to be included in the calculation of fees and costs disclosed in a PDS;
- Confirming that fees and costs in PDSs are still required to be disclosed gross of any tax Benefit being passed on to the member;
- Removing the distinction between performance and performance-related fees so the disclosed performance fee will include the performance fees at the product and underlying investment vehicle levels; and
- Rewriting and restructuring RG 97 to contain separate discussions of managed investment products and superannuation to make it easier to use and understand.
For PDSs, the new requirements will apply to PDSs given on or after 30 September 2022. Issuers may elect to apply the updated PDS requirements from 30 September 2020.
For periodic statements (ongoing or on exit), the new requirements will apply to periodic statements for a reporting period that commences on or after 1 July 2021. Issuers may elect to apply the updated periodic statement requirements if the periodic statement is for a reporting period that:
a) periodic statements commencing on or after 1 July 2020, or
b) ends on a day that is on or after 1 July 2020 if the reporting period ends on the exit date because the holder of the product ceased to hold the product on the exit date.