Australia’s corporate watchdog has launched a targeted review of fee disclosure rules that could spur more superannuation investment in property.
ASIC will examine how stamp duty is disclosed under Regulatory Guide 97, which governs fees and costs in product documents and periodic statements. Industry has warned the rules can skew performance test results and discourage property allocations by funds.
ASIC chair Joe Longo said the move responds to consultation at an investor roundtable convened by the Treasurer. ‘This is exactly the sort of actionable idea to address regulatory issues ASIC is open to testing,’ Mr Longo said.
‘If the review finds appropriate changes will deliver benefits without undermining disclosures, then ASIC will act.
‘We want to ensure red tape isn’t unnecessarily holding back investments.
‘A significant portion of Australia’s $4 trillion superannuation system already invests in property assets, but we have heard there is appetite for more.
‘This review will allow us to look at the way our regulations govern the calculation of fee-adjusted returns and encourage transparency and investment in our economy.’
The review will also consider whether class order relief is needed to align disclosure of internally and externally managed private credit. Mr Longo said the aim is consistency and better outcomes for members. ‘A change like that could encourage internal management meaning lower costs for superannuation members as well as continuing to support safe credit growth for business borrowers.’
ASIC will lead the review with industry representatives and Treasury. It will report by 30 November. The panel will seek submissions from experts and key stakeholders.
RG 97 sets out which fees and costs are disclosed in APRA’s superannuation performance test. It requires reporting of transaction and operational costs, including brokerage, buy–sell spreads, settlement and custody costs, clearing costs, and stamp duty.
Stamp duty on unlisted property, such as new apartments, is shown as a transaction cost. For listed property, such as real estate investment trusts, the duty is included in investment fees.
Some costs are excluded because they are hard to itemise. These include borrowing costs, property operating costs, and certain implicit transaction costs unless captured as indirect costs.
