For many years now, ASIC has been on a quest for the Holy Grail of transparency and comparability in fees and costs disclosure of financial products.
The industry has been a party to this crusade - in our experience, willingly and with a view to making sure the proposed regime worked and achieved the overarching policy objective.
Necessarily, there have been many twists and turns in this tale. Thus, it has taken on elements of an Icelandic Saga-extending over a considerable time frame, involving many developments and outcomes, both foreseen and otherwise. We may have reached the end of this particular saga; however, in the author’s humble opinion, we may be at the start of a new and interesting saga.
This will involve the practical implementation of the new rules by industry, the development of an updated Industry Guidance Note by the cross-industry working group and regulation by ASIC.
Minor amendments to RG 97
In November 2019, ASIC released a new RG 97 and complementary legislative instruments. These built upon a number of years of consultation, extensive engagement with industry and the appointment of an independent expert by ASIC to review the regime and the release of the expert’s report. ASIC was to be congratulated on these documents for their clarity and responsiveness to industry concerns.
Industry, however, did identify a number of drafting and practical issues in the new documents and communicated these to ASIC.
Subsequently, on 24 July, ASIC issued what were referred to as “minor amendments” to RG 97. ASIC indicated that the amendments were in response to COVID-19 and to provide greater clarity and confirm ASIC’s policy position on issues that were raised by industry.
Note that there has been no change to the periodic statement transition arrangements in relation to timing. There has been an amendment however to clarify that only the issuer can elect to apply the periodic statement requirements early.
Other amendments: ASIC has made what are referred to as minor amendments. These are said to be amendments to confirm ASIC’s policy position on:
- the disclosure of buy-sell spreads in a periodic statement for collective investment products under [CO 14/1252].
- the disclosure of performance fees;
- the treatment of derivatives costs; and
- the significant event notice requirements.
Other amendments include consequential amendments, correction of cross-referencing errors and minor inconsistencies between the templates in the RG and legislative instrument.
The FSC is considering these changes and will work with other industry participants in the Industry Working Group to update the cross-industry guidance note on RG 97. On the whole, the changes appear to be consistent with the positions the FSC has advanced to ASIC concerning the 2019 iteration of the material. However, the implementation of the new regime may give rise to further and new issues. We will be monitoring progress in this respect and will advise members accordingly as industry works in this brave new world.
OPINION PIECE - by Paul Callaghan, General Counsel & Company Secretary