New fee and cost disclosure requirements for superannuation and managed investment scheme products start 30 September

The Superannuation and Funds management teams
22 Jul 2022 Time to read: 2 MIN

Issuers of superannuation and managed investment scheme products will recall the fee and cost disclosure requirements that were introduced for Product Disclosure Statements (PDSs) and periodic statements under ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070, with further guidance regarding these changes provided in an updated Regulatory Guide 97: Disclosing fees and costs in PDSs and periodic statements (released in November 2019, re-released September 2020) (RG97 regime).

While the transition period has felt like a long time coming (given multiple technical issues that needed to be worked through and then the impact of COVID-19), issuers should be aware that it is set to expire. The new RG97 regime applies to PDSs given on and from 30 September 2022. This means that issuers should now be making preparations to ensure that PDSs for products that continue to be offered on and from this date have been updated for the RG97 regime.

Some of the changes made to the fee and cost disclosure requirements that issuers will need to be mindful of are:

  • For the "Fees and costs summary" (previously the "Fees and costs template"), fees and costs are split into "Ongoing annual fees and costs" and "Member activity related fees and costs".

    For managed investment schemes, there are separate line items now appearing for "Management fees and costs", "Performance fees", "Transaction costs" and "Buy-sell spread". Performance fees also need to be disclosed on a particular basis (for example, “averaged over the previous 5 financial years”).

    For superannuation products, administration and investment fees are now referred to as "Administration fees and costs" and "Investment fees and costs" (and have changed order), with a separate line item for "Transaction costs" also appearing. There have also been some changes under the "Member activity related fees and costs", with "Advice fees" and the "Indirect cost ratio" line items being removed (the latter given such costs are to be disclosed in the "Ongoing fees and costs" section). "Buy-sell spreads", "Switching fees" and "Other fees and costs" remain.

  • There have been some changes to the "Example of Annual Fees and Costs" to reflect the above amendments made to the "Fees and costs summary".

  • Where the product relates to more than one product or investment option, a table headed "Cost of Product" must be included in the "Fees and other costs" section of a full PDS following the "Example of Annual Fees and Costs".This table contains a single amount showing how ongoing annual fees and costs can affect an investment over a 1-year period.

  • There have also been some minor amendments made, for example, to the "Consumer Advisory Warning" and the preamble to the "Fees and costs summary" preamble, as well as some consequential amendments made to definitions.

The differences vary slightly between full and shorter PDSs of course.

Our Financial Services team is able to help by reviewing and updating any current PDSs (or proposed PDSs) to ensure compliance with the new RG97 regime requirements before 30 September 2022.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.