The report, prepared by expert Darren McShane, concludes changes to the disclosure regime would be advantageous, and includes discussion of:

• the way fee and cost information is presented to consumers; and
• some of the information to be included in this disclosure.

ASIC has welcomed Mr McShane’s report as a comprehensive analysis of the fees and costs issues arising under the Australian regulatory framework. In preparing the report, Mr McShane engaged with over 120 different stakeholders as well as reviewing approaches to fees and costs disclosure in other jurisdictions.

ASIC agrees changes to the fees and costs disclosure are in the interests of consumers and industry, and is keen to ensure any changes are practicable for industry while providing transparency and useable comparability for consumers. In the first half of the 2018-19 financial year, ASIC will release a consultation paper setting out ASIC’s proposed response to the issues raised in Mr McShane’s report.

In the meantime, ASIC’s facilitative compliance approach to fees and costs disclosure will continue. ASIC again emphasises the importance of disclosure not misleading consumers. In the last six months, ASIC has intervened to improve disclosure in cases where we had concerns that consumers could be misled.

ASIC will continue to provide updates including through the ASIC website.

• Read the report

Background

In November 2017, as part of the on-going work to develop better costs disclosure, ASIC announced:

• an extension of its facilitative compliance approach to fee and cost disclosure; and
• the appointment of an external expert to review the fees and costs disclosure in RG 97 to ensure it is transparent for consumers.

ASIC has undertaken these actions in response to feedback from across the industry around challenges with the practical implementation of RG 97 (17-369MR).

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This follows ASIC’s announcement of its decision to have an external expert review Regulatory Guide 97 Fees and costs disclosure (RG 97) to ensure that it is effectively meeting its objective of providing greater transparency for consumers (17-369MR). Mr McShane will commence the review from December 2017. The review is expected to be completed by the end of the first half of 2018.

Darren McShane has extensive experience in the superannuation and managed investments industry and until recently was Chief Regulation and Policy Officer and Executive Director of the Mandatory Provident Fund Schemes Authority in Hong Kong, where he led the development of the regulation of the Hong Kong pensions system. Until recently he was also Chairman of the International Organisation of Pension Supervisors Technical Committee.

The aim of the this review is to ensure that legislative modifications and regulatory guidance issued by ASIC will best meet in practice the objective of improving fees and costs transparency for consumers. The review will involve consideration of both:

• the value of fee and cost  information for consumer decision making and the extent to which it assists consumers (including by contributing to market analysis) in comparing products; and
• the practicalities and costs of producing fee and cost information.

The review will build upon work and stakeholder feedback to date.

During the review ASIC will be facilitating industry input to Mr McShane, who will meet with service providers, representatives of both industry and retail funds, and funds at various levels of compliance with RG 97.

A public report will be released once the review is complete.

In the meantime, the facilitative compliance approach to fees and costs disclosure will continue. During this time, ASIC expects that funds will endeavour to comply with the current legal requirements in good faith and not mislead consumers about fees and costs. ASIC will continue to monitor disclosure to consumers.

Biographical information about Darren McShane

2002-2017: Chief Regulation and Policy Officer and Executive Director of the Mandatory Provident Fund Schemes Authority in Hong Kong.

2014-2017: Chairman of the International Organisation of Pensions Supervisors Technical Committee, leading the development of global standard setting work and best practice papers issued by the organisation.

2003-2017: Member of the product advisory committee at the Hong Kong Securities and Futures Commission, advising on approval and policy issues relating to investment products and fund management.

1990-2002:Director, Australian Securities and Investments Commission, including a leadership role in the development and implementation of the Managed Investments Act and the Financial Services Reform Act.

Qualifications: Bachelor of Laws, University of Queensland; Master of Laws, University of Sydney; Graduate of the Securities Institute of Australia.

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