While the release of ASIC Corporations (Amendment) Instrument 2016/1224, and associated forms and instructions to take advantage of the deferral (published on the ASIC website on 19 December 2017) do provide some more clarity, they also contain some surprises and significant changes.
The Instrument is not confined to giving effect to the deferral of the fees and costs deadline.
The Instrument makes a number of changes to the substantive requirements in Class Order [CO 14/1252] including:
In relation to existing products, aspects of the Instrument which constitute "new law" do not have to be adhered to until 30 September 2017.
Product Disclosure Statements relating to new products that commence to be offered on or after 19 December 2016 will need to comply with the amended [CO 14/1252] from the time the statement is first given.
There are some errors in the Instrument, for example, the revised definition of Investment fee includes a typographical error in paragraph (b)(iii).
The deferral of the fees and costs deadline is also expressed in much more complex terms than was envisaged by ASIC’s announcement. However, there have been some positive changes. For example, the information that must be provided to ASIC before 1 March 2017 (if an issuer wants to rely on the extended deadline) does not need to:
The specified information about fees and costs, that would be required to be included in a product disclosure statement if the statement complied with updated fees and costs requirements, and that must be given to ASIC appears to be confined (in the case of super) to the MySuper product (where relevant) and one other investment option (based on its size). However, there is some discrepancy between the language used in the Instrument and the ASIC’s published instructions in this regard. Also, ASIC can request information in relation to other investment options. And if the additional information is not provided, the updated requirements will apply from the date that is 6 business days after ASIC made its request.
The complexity in the Instrument is compounded by aspects of ASIC’s prescribed form for providing specified information about fees and costs to ASIC. Amongst the information that must be provided to ASIC is an amount of transactional/operational costs and must be accompanied by a declaration (by the person authorized to submit the information to ASIC for a product issuer) that the amounts advised to ASIC (based on the deferred updated requirements) are reasonable estimates and (significantly and, potentially, problematically) that the amounts shown in the current product disclosure statement are correct.
It will take some time to digest the unexpected intricacies of the Instrument and, consequently, this may provide another incentive for product issuers to defer implementation of the reforms until 30 September 2016.
Sign up for informative emails and blog posts.