Fee disclosure guidelines must become law
25 per cent ofSecurities Institutemembers remain unconvinced theAustralian Securities and Investments Commission’s (ASIC) recently released guidelines on fee disclosure will be effective, though the majority of members support ASIC’s recommendations.
The survey, conducted by the Securities Institute on 260 of its members spanning retail and wholesale funds management, superannuation and financial planning, has seen a call for the force of law to be added to the guidelines.
71 per cent of fund managers believe the guidelines must have the force of law if they are to “work effectively and create a level playing field”, the survey says.
25 per cent of respondents say the guidelines, on their own, “won’t be very effective in making it easier for investors to understand fees and costs”.
54 per cent believe the guidelines will be “reasonably effective”, while only 5 per cent of respondents believe they will be “very effective”.
According to Securities Institute president Ian Neal, “tables and figures are not enough in themselves and no more effective if they are guidelines or enshrined in law. Good financial advisers need to ensure their clients genuinely understand what fees and costs they are incurring.”
However Neal does note that “an industry committed to the full disclosure of fees and costs will reassure investors that the minority of unethical providers won’t slip through the net”.
Neal says fund managers will also benefit from consistent across-the-board disclosure “by ensuring a genuinely level playing field”.
However, almost a third of respondents felt better disclosure would not significantly impact consumer choices.
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