ASIC has released its independent report (the Report) in respect to RG 97 which it commissioned on 1 November 2017 in response to strong feedback from industry regarding challenges associated with the implementation of RG 97 and ASIC Class Order CO 14/1252.
The author of the report, Mr Darren McShane engaged more than 120 industry stakeholders to compile his 232 page report, which fundamentally makes 34 recommendations of varying levels of significance, surrounding fee transparency.
In utilising a best practice benchmarking methodology, the report found that in comparison with other disclosure regimes around the world, Australia’s is relatively more onerous in a range of areas.
In an interesting and realistic assessment of the dilemma that confronts consumers when looking to compare products, the report conceded that they can do so only by comparing Product Disclosure Statements (PDS’) which it added is “a laborious and time-consuming exercise that most consumers would likely avoid or short-cut”.
Specifically, the report recommends that ASIC undertake a feasibility study into whether it or another government agency could provide, or sponsor, the development of:
In addition, the report recommended, in the context of managed investment products, that:
Such observations support the objective of the overall review to achieve disclosure outcomes that can better support consumers in making more confident and informed value-for-money decisions.
ASIC has conveyed that it will carefully consider the recommendations made in the report and in the first half of the 2018-19 financial year will release a consultation paper setting out ASIC’s proposed response to the issues raised in the report.
In the meantime ASIC has confirmed it will continue to take a facilitative approach in relation to the compliance with the RG 97 fees and costs regime, and re-emphasised the importance of ensuring that fee and cost disclosure not mislead consumers. In other words, business as usual.
We will continue to keep you advised of developments as they occur.