Although the policy objective of fees and costs disclosure is outcomes that can better support consumers in making more confident and informed value-for-money decisions, for financial service providers disclosures are currently complex and technical.
Currently, disclosure tools comprise:
1. the four key Product Disclosure Statement (PDS) elements (the Fee Template, the Fee Example, the Additional Explanation of Fees and Costs (AEFC) and the Consumer Advisory Warning); and
2. the fee description/calculation and additional explanation of fees and costs in periodic statements.
The Report’s recommendations are structured as a package that provides some relaxation of requirements whilst delivering better overall outcomes for consumers.
The Report reviews the law, existing policy settings, business practices in the industry, international experience, interaction with the Australian Prudential Regulation Authority (APRA) data collection obligations and industry stakeholder concerns.
The report concludes that changes to the 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 fee and cost disclosure.
Interestingly the international comparison includes a discussion of Netherlands pension funds; rather than relying on a point-of-sale document, in the Netherlands, fee and cost information is set out in the fund’s annual accounts supported by legislated, layered digital communications.
ASIC agrees changes to the fees and costs disclosure are in the interests of consumers and industry and is keen to ensure any changes are practicable for industry while providing transparency and useable comparability for consumers.
In the first half of the 2018-19 financial year, ASIC will release a consultation paper setting out ASIC’s proposed response to the issues raised in the report.
In the meantime, ASIC has again emphasised the importance of disclosure not misleading consumers.