ASIC changes so complex you need a whiteboard
The issues surrounding disclosing investment fees and costs are so complex and the Australian Securities and Investments Commission's (ASIC's) efforts to deal with them have been so problematic that a major superannuation organisation has urged a one or two day industry workshop to sort them out.
In what represents a tough assessment at ASIC's efforts to deliver a class order dealing with investment fees and costs, the Association of Superannuation Funds of Australia (ASFA) has urged the convening of a workshop to sort out the complexity.
"By gathering a range of appropriate industry representatives in a room, with a whiteboard and butcher's paper, and allowing sufficient time, it should be possible to work through different investment arrangement and structures, identify issues and develop solutions," ASFA has said in a submission to ASIC.
What is more it is arguing that once the problems have been dealt with by such an industry workshop, the proposed changes should be subjected to a cost-benefit analysis.
"…complying with the fees and costs disclosure regime will necessitate funds incurring significant additional costs," the ASFA submission said.
"These costs should be balanced against, and commensurate with, any benefits which are delivered to consumers. An analysis should be performed of the costs incurred compared with the benefits received and an assessment made as to the extent to which the additional costs are justified."
It said the complexity and variety of the different arrangements and structures through which investments were made created a number of difficulties in complying with the current approach and this would produce inconsistent results and lead to trustees having to incur unnecessary costs.
"By way of example, where a "superwrap" trustee invests in a managed fund this produces a different disclosure outcome when compared to any other type of trustee," it said.
"There does not appear to be a compelling policy rationale for treating platforms differently to other funds."
The ASFA submission also pointed to inconsistencies with respect to fund of funds investment, unlisted unit trusts that invest in the property market, property investment , infrastructure project investment and mandate investments in equity markets.
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