The cost of buy-sell spreads should be charged on a fair and reasonable basis as part of activity within a superannuation lifecycle product, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA has used a submission to Treasury dealing with proposed amendments to the Superannuation Industry (Supervision) Act (SIS Act) to argue that the Government should move further be permitting buy-sell spreads as they relate to investment transaction activity in a lifecycle product.
The organisation said it believed the buy-sell spread should be charged on a fair and reasonable basis, as opposed to the current requirement that they be the same for each member.
“This would be in keeping with the policy intent of the proposed amendments and the requirements to stream gains and losses to MySuper members on a fair and reasonable basis,” ASFA said.
It pointed out that the current SIS Act defined a buy-sell spread as “a fee to recover transaction costs incurred by the trustee”.
“The ability to charge buy-sell spreads permits a trustee to pass on the costs of acquiring and disposing of assets to the members who have transacted, as opposed to being passed on to all members, and therefore is a more equitable and transparent mechanism,” the ASFA submission said.
“Given the current drafting of sub-sections 29VA(5) and (6) it is not possible to achieve a fair and reasonable attribution of investment-related costs as there are different asset allocations in each subclass and so the investment-related costs will vary from subclass to subclass,” it said.
“In our view, to enable the policy intent of the proposed amendments to be fully achieved, the charging of buy-sell spreads should follow the proposed amendments to the charging of investment fees and allow buy sell spreads to be charged on a subclass by subclass basis.”