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Update on RG97

Four years on from when the corporate regulator modified laws surrounding product disclosure through class order, the Australian Securities and Investments Commission (ASIC) has released a consultation paper outlining proposed changes to the fees and costs disclosure regime for Managed Investments Schemes (MIS).

The law was first modified in 2014 and, after the transition period was extended, compliance was set for a hard deadline of 30 September 2017. Complying with the standard under the existing framework, however, proved difficult for industry.

Early in 2018, Pip Bell from PMC Legal told GRC Professional that the main challenge with RG 97 was the regulator’s approach.

“ASIC took a prescriptive rather than a principles-based approach, and this has proven difficult for the regulated population to apply in practice. Consequently, after consultation and industry agitation, a number of amendments were made to the class order, and the commencement of the new requirements was postponed to extend the transition period,” Bell said.

At the time of that interview, ASIC employed Darren McShane to conduct a review of the regulatory guide.

The report was subsequently released in July of last year.

In addition to the consultation paper released earlier this week, the regulator said it will be conducting consumer testing on some aspects of the proposals outlined in the consultation paper.

Proposals from the McShane report that the regulator that intends to take forward are:

  • simplifying how fees and costs information is presented to consumers;

  • reducing data inputs, including eliminating the requirement for fees and costs disclosure to incorporate some costs categories, particularly property operating costs, borrowing costs and implicit costs; and

  • making disclosure for managed investment schemes more consistent with superannuation.

The consultation paper can be downloaded here. The deadline for submissions is 2 April this year.

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