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Are you ready for RG 97…again?

Last week, the Australian Securities and Investments Commission (ASIC) released an updated version of Regulatory Guide 97 Disclosing Fees and Costs in PDSs and Periodic Statements.

The regulator noted that the legislative instruments accompanying the guide are now ‘more practical’ and intended to promote compliance.

“The updated RG 97 will provide greater clarity on disclosure obligations for product issuers and platform operators, which should result in more transparent and useable fees and costs information being produced,” Commissioner Daniel Press said.

According to the official statement from the regulator, key changes in the standard are:

  • a re-grouping of values in the re-named fees and costs summary to more-clearly show fees and costs that are on-going and those that are member-activity based;

  • a simplification of ongoing fees and costs into three groups: Administrative, Investment and Transaction;

  • including a single ‘Cost of Product’ figure in a PDS; and

  • simplifying how fees and costs are presented in periodic statements.

Press added, “We expect the changes to RG 97 will help address some previous industry concerns, deal with some practical issues, and offer guidance for more effective disclosure.”

This updated guidance follows a comprehensive external review of the original RG97, published a few years ago.

But there were some challenges with this initial approach. Pip Bell from PMC Legal told the GRC Professional, “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.”

In January of this year, ASIC released a consultation paper that closed in early April after an extensive review, conducted by Darren McShane.

In his report, which was completed in July, McShane highlighted three key amendments to the disclosure regime:

  • 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.

“While disclosure has its limits, transparent fees and costs are important for the proper functioning of the market and product issuer accountability. Effective fees and costs disclosure supports better decision-making by consumers and the advisers who assist them,” Press said.

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