In brief
ASIC has today announced that superannuation fund trustees and responsible entities will have until 1 October 2017 to comply with the updated fee and cost disclosure rules for PDSs set out in ASIC Regulatory Guide 97 and ASIC Class Order 14/1252 – but only if they comply with certain conditions. Partner Geoff Sanders and Senior Associate Stephanie Malon report.
The extension and conditions
Under a proposed amendment to ASIC Class Order 14/1252 announced by ASIC today, both superannuation trustees and responsible entities of registered managed investment schemes will, subject to certain conditions (below), have until 1 October 2017 to comply with the new fee and cost disclosure rules applying to PDSs under RG 97 and Class Order 14/1252 (as amended). Previously, all PDSs on issue from 1 February 2017 were required to comply with these new rules.
However, the extended commencement date for the new rules is conditional – the three key conditions are that issuers:
- must not have previously opted in early to complying with the new rules;
- must notify ASIC in writing that they wish to rely on the relief by 31 January 2017; and
- must provide ASIC with the information that they would have been required to include in the fees and costs section of their PDS under the new rules by before 1 March 2017.
ASIC has said that it intends to use the information provided to it under the relief to check that issuers are taking reasonable steps towards complying with the new rules (and to identify any likely non-compliance by issuers).
For those issuers who have already opted-in to the new rules (or don't wish to rely on the extension relief), ASIC's previously communicated facilitative compliance approach will continue to apply until 1 October 2017.
No 'get out of jail free' card
It is clear from the conditions of the relief that issuers will not be able to use the extension as a way of simply putting off the work required to comply with the new RG 97 rules until next October.
That said, there are still in our view some very significant practical benefits of taking advantage of the extra time offered by ASIC (other than the obvious advantage of having a 1 March rather than a 1 February deadline).
In particular, while care needs to be taken to ensure that the information provided to ASIC by 1 March 2017 is as accurate as possible, ASIC has flagged that it will take a pragmatic approach to assessing the quality of that information (in recognition of ongoing uncertainty in the market as to certain aspects of the new regime) – ASIC has said it won't take enforcement action based on errors in that information unless it considers the issuer is intentionally providing inaccurate information, or has not taken reasonable care or steps to comply. This is obviously a very different standard of care than would apply to information published in a PDS.
What's next
ASIC will amend the Class Order shortly and will also publish forms for the purposes of providing ASIC with the information required by March 2017.
Issuers will need to determine relatively quickly whether the extension relief is something they wish to take advantage of – our expectation is that many will.