Fund managers get all clear on fees
Fund managers have been given the green light to charge varying fees based on investment size by the investment watchdog.
Fund managers have been given the green light to charge varying fees based on investment size by the investment watchdog.
The Australian Security and Investments Commission (ASIC) has finalised its position on charging fees to be applied within the same managed investment scheme.
Currently the Corporations Law requires fund managers to treat investors equally if they are in the same class of investment.
Since the introduction of the Managed Investments Act, ASIC has been allowing fund managers exemptions to charge differing fees on a case-by-case basis.
ASIC national managed investments manager Darren McShane says the policy statement is the final position and will be applied to each class of investment. ASIC released the policy after extensive submissions from consumers and industry groups.
“We asked for submissions and feedback about whether this was the best idea and felt there was good reasons to go ahead with it subject to disclosure and with limited scope,” McShane says.
According to McShane, ASIC has taken the view that the current situation restricts members being charged differing fees based on the characteristics of members, such as funds invested in the scheme.
As a result ASIC extended the relief to charge differing fees but has placed limitations on its extent.
Fund managers can now offer differing fees arrangements based on banding, to all members, while professional and sophisticated members will be able to negotiate fees.
Sophisticated members are those considered to be investing either more than $500,000, have assets in excess of $2.5 million or a gross annual income of $250,000. Professional members are those registered and licensed, such as a dealer group.
McShane says the relief will only exist when full disclosure of fees is evident and smaller investors will be protected as ASIC considers the general duty of schemes is to act in the best interest of members.
AUTHOR
Jason Spits
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