Delay in fees disclosure
ASIC notice means super loophole will stay open
LONG-MOOTED moves by the corporate regulator to close a loophole allowing retail superannuation funds to avoid disclosing all the fees they charge have again been pushed back indefinitely.
The Australian Securities and Investments Commission yesterday confirmed any changes to the loophole would likely be delayed many months, potentially years.
The reforms have already been delayed by well over a decade.
Existing guidelines surrounding fee disclosure by super funds, called RG97 – standing for Regulatory Guide 97 – were put in place in 2006 but do not require all super funds to disclose all the fees and charges they extract from the nation’s retirement savings.
Because of legally mandated super contributions, the sector has now grown to a massive $2.6 trillion – representing the fourth-biggest pool of pension funds on the planet.
But ongoing failures by regulators, including by ASIC, have left much of that money open to widespread fee-gouging.
As previously reported, a legal loophole has meant that while there are strict rules governing how trustees deal with super money they manage, the actual penalties around those laws have been carved out of the relevant Act.
That means fund management giants cannot even be forced to pay, for example, a $10 fine for gouging billions of dollars of the public’s super over many years.
The loophole was previously little known outside select groups of super fund managers.
In March, ASIC deputy chairman Peter Kell told a Senate committee – which regulators and other bodies are legally required to front if asked – that the regulator had felt pressured to place RG97 changes on hold because of pressure from super industry lobby groups.
“Participants right across the superannuation sector had raised a series of concerns around the requirements that were being developed around disclosure under regulatory guide 97,” Mr Kell said at the time.
“There were ongoing and significant issues around whether the regime was workable, whether the particular requirements were being interpreted correctly, whether there were practical ways that it could be improved.”
The corporate regulator yesterday released an “external report” on RG97.
Commissioned last November, the report said “changes to the disclosure regime would be advantageous”.
ASIC said it would release a “consultation paper” setting out its “proposed response to the issues raised” in the report in the “first half of the 2018-19 financial year” – meaning sometime by New Year’s Eve.
The industry would then be called on for yet more responses with a view to ASIC, at some undetermined time in the future, amending the guidelines.