From the end of September there will be significant changes to the way superannuation and managed investment funds disclose the fees and charges that affect consumers.
The Australian Securities and Investments Commission (ASIC) has identified a significant amount of under-reporting of fees, and considerable inconsistency in the way fees and charges are listed by funds. ASIC found this makes it very difficult for consumers to understand how much they are paying, what they are paying for, and to compare funds.
The changes will help bring consistency to exactly what must be included in the product disclosure statement (PDS) across the whole industry. From later in 2018, the changes will also ensure that the information in PDS and in periodic statements will match more clearly.
As a result, consumers will be better able to understand the fees and costs. The consistency and more accurate disclosure of fees will also help ensure that funds are competing more fairly.
Fees are typically deducted from your account on a regular basis at the end of each month, or when an action is taken. They can be either a dollar amount or a percentage.
ASIC's MoneySmart website lists the main types of fees. They include administration fees, investment fees, and advice fees, among others. Investment fees are charged for managing your investment, and can vary for different investment options. Advice fees are for personal advice provided about your super and other investments.
Your adviser may also receive fees and commissions for certain investments they recommend to you, and these are not currently included in the PDS by the super fund.
ASIC advises consumers to check the annual statement to see if they are paying for financial advice. If you are not happy or unsure about any fee, you should contact your super fund and ask how you can stop these fees being deducted.
ASIC will make amendments to provide more certainty around the relevant requirements, and undertake compliance checks to ensure funds are meeting their obligations.