IFSA clashes with ICAA over performance standards
Differences in disclosure documents between major superannuation providers currently permitted by regulators and industry associations are making it too hard for investors to compare super funds, the Institute of Chartered Accountants (ICAA) has warned.
ICAA’s concerns were stoked by the results of a study of product disclosure statements (PDS) of 12 of Australia’s largest retail super funds, conducted for the ICAA by research house Morningstar .
Inconsistencies between PDSs included variations in the accounting periods — most funds work off a June 30 period but some also quote December 31 and March 31, the period over which performance was measured and the provision of performance figures taken well before the PDS was issued.
None of these inconsistencies are at odds with Australian Securities and Investment Commission (ASIC) rules or Investment and Financial Services Association (IFSA) standards.
But the ICAA has called on the industry to adopt new standards as quickly as possible to address the inconsistencies.
ICAA manager of financial planning and superannuation Hugh Elvy said it would be ideal if all funds adopted the same accounting periods and compared returns from the same dates over the same periods of time. But he did accept that this might be unrealistic for all funds, as it would be impossible for them to all come out with a PDS at the same time.
“So we would at least call for clearer information and a section in the PDS highlighting to investors where they can get the most recent return figures,” he said.
Meanwhile, IFSA chief executive Richard Gilbert has described the ICAA’s request as “an unpleasant surprise”.
“We don’t understand where they are coming from. IFSA’s guidelines are based on world’s best practice GIP standards. In relation to performance advertising, we recommend that members comply with ASIC requirements, so if ICAA has a problem they should go and see ASIC.”
IFSA also pointed out that performance is not actually required in a PDS and that comparisons in one, three and five-year time frames and a reference to where more recent figures can be found were required for non PDS documents from July 1 this year. Similar requirements for PDS documents will come into force in mid 2006.
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