ASIC cautions platform providers on fee disclosure
Platform providers should not be marketing their platforms as though the only fees and costs are the platform fees, according to the Australian Securities and Investments Commission (ASIC).
Responding to questions on notice flowing from House of Representatives Standing Committee on Economics Review of the 2016 ASIC annual report, the regulator acknowledged the status of platforms in terms of the so-called “interposed vehicle test” but made clear what it expected from platform providers.
It also warned that it would move to take action if it believed platform providers were breaking the rules.
“A platform provider should not market their platform as though the only fees and costs are the platform fees and ASIC may take further action if they do,” the ASIC response said.
“The revised RG 97 is now very clear on our expectations with regards to platform fee and costs disclosure, including the need for examples and to show the cumulative effect of the fees and costs of the investment that may be selected,” it said.
“We expect that platform providers will give examples of the cumulative effect of fee and cost disclosure to investors. We also expect that as these investors are prepared to make their own choices about investments, their level of engagement may be higher than a person who goes into (for example) a MySuper product,” the ASIC response said.
It suggested that platform investors might also have the assistance of a financial adviser, and additional disclosure about fees and costs might be included in the Statement of Advice (SOA) received by the client in such cases.
“Where investment involves interposed vehicles in a non-platform context, it is done in order to achieve the objectives of the product in terms of exposure to an underlying asset or product,” the ASIC response said. “As such the fees and costs incurred by using the interposed vehicle are integrated into the cost of achieving the investment. However, in the context of a platform, exposure to the intermediary vehicle is the objective.”
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