Associations agree to disagree on fee disclosure

By Mike Taylor

The ideological differences between the Investmentand Financial Services Association (IFSA) and the Association of SuperannuationFunds of Australia (ASFA), which led to the Federal Government proposing its own single fee disclosure model for superannuation funds, have reared their head again following last week’s announcement in Canberra.

Both IFSA and ASFA differed strongly in their response to the proposed fee disclosure model announced by the Federal Government, which moved on the matter after both associations failed to find common ground on the issue.

IFSA chief executive Richard Gilbert welcomes the proposals as “balanced and sensible”, while his ASFA counterpart, Philippa Smith, says they “simply don’t go far enough to be truly helpful to consumers”.

The Government’s proposals include a new single figure fee comparison table and new boxed consumer advisory warnings in product disclosure statements.

“This integrated package of reforms will ensure that fee information is presented to consumers in a simple, clear, consistent and comparable manner,” Parliamentary Secretary to the Treasurer Ross Cameron says.

Meanwhile, the Australian Democrats have indicated they will support the model.

Smith says the critical flaw in the Government’s proposal is that the reforms only advocate an illustration of the effect of fees in a single year, with no provision being made for the impact of fees over time.

Gilbert says the use of a range to account for entry or contribution fees is appropriate, as is the decision to incorporate a standardised alert on the impact of fees over time.

Smith says ASFA had strongly recommended that examples be given of fee impact over five, 10 and 30 year periods.