ASIC has commenced a targeted review that may help boost investment in property by Australia’s superannuation funds.
The review will focus on requirements to disclose stamp duty payments in Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97). Concerns have been raised that the disclosure impacts performance test results and discourages investment in property by superannuation funds.
ASIC Chair Joe Longo said the agency was responding to consultation at the recent 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.’
Mr Longo said the review would also consider whether class order relief should be given to bring consistency to how internally and externally managed private credit arrangements are disclosed.
‘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.’
The review will be led by ASIC and include industry representatives, and Treasury. The review will report by 30 November.
Background
The review panel will seek direct submissions from experts and key stakeholders.
RG 97 currently requires the disclosure of transactional and operational costs including brokerage, buy-sell spread, settlement costs (including custody costs), clearing costs, and stamp duty on an investment transaction.
RG 97 governs which fees and costs must be disclosed in APRA’s superannuation fund performance test. If the investment is in an unlisted property such as a new apartment, the stamp duty fee is disclosed as transaction cost. For investments in listed property such as a real estate trust, stamp duty is rolled into the investment fees disclosure.
Not every fee and cost is included due to their difficulty to itemise. For example borrowing costs, property operating costs, and unless the costs are indirect costs covered by cl 101A(3)(a)(ii), implicit transaction costs or market impact costs.
Related information
RG 97 Disclosing fees and costs in PDSs and periodic statements
