The Australian Securities and Investments Commission’s decision to defer the starting date for super funds to disclose their portfolio holdings has attracted criticism from sections of the industry. We’re with the critics.
The first reporting date was to have been 31 December this year but ASIC has pushed it back to 31 December 2020, with disclosure required on the fund trustee’s website no later than 90 days after that date. This is one of a number of deferrals over the years.
The regulations setting out the way in which disclosure is to be organised have not been written yet.
ASIC explained in a media release that the deferral is to give the Government time to write the regulations.
It is not the first time disclosure has been put off. Portfolio holding disclosure requirements were introduced into the Corporations Act in 2012.
By 2014 nothing had happened and the introduction was deferred until July 2015. A series of further deferrals have followed.
In April this year, the law was amended t simplify the reporting requirements and introduce exemptions for certain entities and types of holdings.
Following the latest deferral, ASIC said: “This deferral does not represent a policy view by ASIC in relation to the application of the portfolio holding disclosure requirements or a view as to the time likely to be taken by the Government in setting a policy view.”
In other words, the Government is being slack about writing the regulations and probably being persuaded by industry lobbyists to put off implementation.
Jeremy Cooper, who chaired a review of the superannuation system in 2010 is not impressed. He tweeted: “Not again! How many free kicks can the super industry get. This was, I might remind everyone, first recommended in mid-2010. It remains a good idea.”
Researcher Morningstar was also unimpressed. In a note it sent out last week it says: “Australia is the only country out of 25 surveyed in Morningstar’s Global Fund Investor Experience Study, conducted every two years, where funds aren’t required to give investors a full accounting of what assets they hold.”
Morningstar would also like to see fund managers provide greater disclosure of their holdings. “Fully transparent super fund holdings mean little without similarly transparent managed funds, which comprise a large portion of many retail super funds. This would arguably be a more logical place for the regulator to start.”
Morningstar points out that US funds have had disclosure requirements since 1940. Fund managers in the UK and Canada also have disclosure requirements.
It blames the Financial Services Council for lobbying against disclosure.
Fund manager don’t like to disclose their holdings, saying it is giving away their intellectual property and would make it difficult to get set in securities without having prices inflated by traders looking to take advantage of them.
They forget that it is not their money they are investing. It is ours, and we have a right to now what they are buying and selling on our behalf.