The FSC has been involved in ongoing advocacy concerning this long-standing topic, writing submissions, meetings with ASIC and participating in the cross-industry Industry Working Group (IWG).
Finally, the FSC and industry were able to achieve a reasonable outcome when ASIC, in November 2019, released a revised RG97 and Instrument.
Current Law
Under the existing law, the new fees and costs disclosure requirements - in updated RG 97 and ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070 (Instrument) - apply to:
- Product Disclosure Statements (PDSs) issued on or after 30 September 2020, and
- periodic statements (ongoing or on exit) for a reporting period that commences on or after 1 July 2021.
Issuers may 'opt-in' to the updated periodic statement requirements if the periodic statement is for a reporting period that:
- commences on or after 1 July 2020, or
- ends on a day that is on or after 1 July 2020 if the reporting period ends on the exit date because the holder of the product ceased to hold the product on the exit date.
Unfortunately, under the current law, there is no ability to ‘opt-in’ early to the new requirements for PDSs.
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ASIC Engagement
The FSC has continued to engage with ASIC in relation to further issues which have been identified in the new Instrument dealing with fees and costs disclosure in superannuation and for collective investment vehicles and the complementary RG97. Some of the issues which have been identified include the following:
- The precise meaning and practical impact of the transitional provisions;
- Periodic statements for MIS products;
- Disclosure of performance fees individually for interposed entities, rather than our preferred model of disclosing an aggregate figure (on the basis that the actual aggregate is what the consumer is interested in);
- Operation of the derivatives provisions.
The FSC continues as a member of the IWG along with other industry bodies such as ASFA and AIST. This Group is working to issue a revised Guidance Note on RG97.
ASIC is currently working on amendments to address issues that have arisen since the release of the revised Regulatory Guide 97.
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COVID-19 Impact: PDS transitional dates extended and early opt-in permitted from 30 September 2022
Given the impact of COVID-19 on issuers, ASIC initially indicated that it was looking to revise the current RG 97 timetable. The comment was made that ASIC was considering amending the transitional arrangements for PDSs to allow entities to come into the new disclosure regime from 30 September 2020 and requiring any PDS given after 30 September 2022 to comply with the new disclosure regime.
ASIC now has “firmed up” its position on extending the transitional period. Thus, ASIC has stated in an FAQ:
*NEW* 2E. Will ASIC be amending the transitional arrangements in RG 97 instrument ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070?
Yes, the ASIC will be amending the transitional arrangements for Product Disclosure Statements (PDSs) shortly to allow entities to come into the new disclosure regime from 30 September 2020 and require any PDS given on or after 30 September 2022 to comply with the new disclosure regime. There will be no change to the periodic statement transition arrangements. ASIC will issue a media release and update the RG 97 webpage when the amendment is made.
See also: details of changes to ASIC regulatory work and priorities in light of COVID-19 (row 9).
This FAQ was last updated 26 May 2020.
Further information may be found here.
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Outcome
The outcome is that product issuers now have further time, if they require it, to comply with the Instrument in terms of PDS disclosure, that is, until 30 September 2022. Equally, if an issuer is ready to comply with the requirements from 30 September 2020, they may do so.
The FSC is yet to see the formal amendments to the Instrument to give effect to this change of policy. However, it’s anticipated that the amendments will issue in the near future and be consistent with the announced policy.
This enables issuers to plan for a staged entry to the new regime with the provision of early opt-in, this is important given the market and business disruption caused by COVID-19 and the measures taken to respond to the pandemic.
OPINION PIECE - by Paul Callaghan, General Counsel & Company Secretary
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