As part of its commitment to Treating Customers Fairly, ASISA members have developed the Effective Annual Cost (EAC) measure. This new standardised disclosure will give advisors the ability to compare charges across most retail investment products and it will assist advisors to compare the impact of charges on investment returns. Sharing this information with clients will assist advisors in making full disclosure about the charges related to the recommended investment product and it will enable clients to make informed decisions regarding the recommended investment product.
The EAC is a measure of the charges that an investor will likely incur in purchasing and holding a financial product, and does not attempt to measure the features of a financial product.
In addition to the disclosures required by relevant legislation, this new Standard specifies the minimum disclosure requirements that ASISA members will adhere to. The General Code of Conduct under the FAIS Act was used as the basis for the further disclosure contained in this new standard.
The Standard will apply to the following financial products:
- Participatory interests in collective investment schemes (including foreign collective investment schemes duly approved for marketing in South Africa);
- Contracts under a linked investment services provider licence;
- All insurance contracts (other than pure risk-based insurance contracts and compulsory and voluntary purchase guaranteed non-profit Life Annuities) and products wrapped in a life wrapper; and
- Memberships of retirement annuity funds and preservation funds.
ASISA members are required to complete implementation of the above Standard by 1 October 2016.
We previously wrote about the Standard, click here to read the article of 23 February 2016