OnePath has revealed further details of the shelf space fees it charged investment managers on its platform when the group was under ANZ ownership, saying the fees resulted in a “net benefit” to customers despite the fact that legislation forced their removal.
In a recent hearing of the House economics committee, OnePath Custodians independent chair Victoria Weeks said the fees, which were the subject of an adverse finding in the royal commission, were “rather complicated” and had been the subject of an APRA investigation following the inquiry.
“The royal commission referred the matter to APRA to look into in more detail – unfortunately the fees are rather complicated but the general effect, and we’ve provided information to APRA on this detail, the net benefit is reflected in our product pricing,” Ms Weeks said.
“Although those arrangements will be removed because of grandfathered commissions legislation, the net benefit of the arrangements was reflected in product pricing and investment cost.
“But the structuring of those arrangements makes them complex and creates an asset charge and a rebate component rather than a net fee.”
Ms Weeks was responding to questioning from committee member and Labor MP Daniel Mulino around the changes that had been made at OnePath since the royal commission, which heard evidence around the group’s complex series of fees charged to investment managers and flowing back to other parts of the OnePath business.
Findings from the commission also questioned whether the group’s acquisition by IOOF was in fund members’ best interests, after it was revealed that the OnePath board was not consulted on the transaction and had not met with IOOF to discuss how member interests could be satisfied at the time of the inquiry.
However, Ms Weeks said the commission had “commended the trustee on the way we undertook responsibilities in relation to” the IOOF acquisition of OnePath, and that the board was now satisfied the transaction had been undertaken in member best interests.
“One of many factors that informed our decision was that we have become part of an organisation that is solely dedicated to wealth management and can assist in building product performance and scale, and with that comes better outcomes for members,” Ms Weeks said.
“How that plays out in terms of specific fees is yet to be determined, but we see the environment in which we’re operating gives us the opportunity to ensure the net returns to members can be improved.”
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