Posted: 12 Feb. 2020 15 min. read

Revised RG97, another step towards transparency?

Overview
 

On 29 November 2019 ASIC released its updated guidance on fees and cost disclosure for issuers of superannuation and managed investment products with the revised Regulatory Guide 97 Disclosure of fees and costs in PDSs and periodic statements (RG 97). The purpose of RG 97 is to drive greater transparency and consistency in fees and cost disclosures so that consumers can make informed, value-for-money decisions about their investments.

In releasing the package of reforms, ASIC stated in its media release that it will:

  1. Work with industry bodies to clarify how financial advisers should use fees and costs in product disclosure statements (PDS) to inform their advice to clients.
  2. Monitor fees and costs disclosures and evaluate the action where there is misconduct.

Given that the new disclosure requirements in the updated RG 97 will apply to all PDSs issued on or after 30 September 2020, it is critical to prepare for the new requirements now, given the short timeframe for implementation.  

Periodic and exit statements with reporting periods commencing from 1 July 2021 must comply with the new requirements. However, where a fund is ready, an early opt-in is available for reporting periods commencing from 1 July 2020.

ASIC’s communications, including the use of the term misconduct, suggests that it will not tolerate incorrect disclosures – whether they are deliberate, due to a poor understanding of the requirements, or poor implementation processes.

Key effective dates and ASIC expectations
What changes?
 

The changes follow ASIC’s Consultation Paper (CP 308) in relation to proposed amendments to RG 97 and incorporates all key recommendations from the independent expert, Darren McShane’s report of August 2018 that was issued to ASIC.  Modification of the law has been achieved by way of two legislative instruments, ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070 and ASIC Corporations (Amendment) Instrument 2019/1071.

The key changes to RG 97 are summarised below:

The need for independent assistance and assurance
 

RG 97 requirements can be complex for many issuers.  There can be many questions of interpretation, data sourcing challenges, and complex calculation models.   Often we see that there is only a small number of people with sufficient in-depth knowledge of the products, the RG 97 requirements, and the data and calculation processes.  There is often very limited independent assurance provided to Disclosure Committees and Boards.

If you are a superannuation trustee, responsible entity, notified foreign passport fund operator, or platform operator, it is important to take action now to ensure that you become compliant with the new requirements once they commence.  We would be pleased to assist you with responding to these changes.

More about the authors

James Oliver

James Oliver

Partner, Audit & Assurance

James is a partner within our Financial Services assurance group, with 16 years experience in London, Sydney and Melbourne. James leads a national team of specialist FSI internal audit and GS 007 practitioners serving the financial services industry. While James team covers the broad spectrum of FSI sectors, his personal sector expertise is principally in superannuation, funds management and related service providers.