Deferral requested for dollar disclosure
The Investment and Financial Services Association (IFSA) has called for a three-year deferral of the introduction of dollar fee disclosure regulations on closed financial services products and those on legacy IT systems.
It is one of the key recommendations in a final submission on dollar fee disclosure to Treasury by IFSA’s fees and charges working group (FCWG).
FCWG spokesperson Sue Mieog said the deferral was necessary because a lot of fund managers currently have projects in place to rationalise their legacy products or move to more up-to-date IT systems.
Also Advance Asset Management’s head of product, Mieog said the managers stood to lose out on cost savings if required to switch suddenly from rationalising their legacy systems to programming them for dollar fee disclosure.
The working group was committed to meeting Treasury’s July 1 compliance deadline for open products on open IT systems, she said, but there was a need for more time for closed or legacy products.
“To put our submission to Treasury into perspective, we’re committed to doing dollar fee disclosure, but we have concerns over its practicality when implemented.”
Mieog said the working group had not yet received comment from Treasury on the submission but was confident of winning approval from Treasury.
Treasury extended the deadline for compliance with the dollar disclosure regulations from January 1 to July 1 this year shortly before Christmas last year.
“We need a fast turnaround [by Treasury on the plan] to enable IFSA members to begin preparing in earnest for the regulations, notably with IT programming, where the bulk of the compliance effort will be required.
“On the other hand, we don’t want Treasury to be so quick it overlooks any of our recommendations, because there’s no time to make another submission.”
Another key recommendation of the submission relates to consistency in the terminology supplied by Treasury to enable fund managers to know what to include in the calculation of dollar fees.
“There have been a lot of acronyms used by Treasury for this process, the latest of which is called indirect cost ratio (ICR), which has led to industry confusion.
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