The Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments Commission (ASIC) today jointly published Unit Pricing – Guide to good practice for the life insurance, superannuation and funds management industries.

The guide outlines a range of good practices and has been developed following a joint review by APRA and ASIC of unit pricing practice, aided by extensive industry consultation.

Both regulators have noted that serious problems can arise for investors where errors in the calculation of unit prices occur.

Professor Berna Collier, ASIC Commissioner, said unit pricing issues can be complex, and there have been cases where compensation has been or is being paid to affected unit holders.

"We acknowledge that there are many thousands of unit prices calculated by industry each day and the vast majority will be correct. Consumers can be confident that they will be treated fairly", Professor Collier said.

"ASIC and APRA are committed to working with the industry to resolve these errors in the best interests of unit holders", she added.

APRA Member, Mr Steve Somogyi said that APRA and ASIC were encouraged by companies pro-actively identifying and reporting unit pricing problems to the regulators.

"APRA and ASIC are concerned to ensure that boards and senior management take seriously their responsibilities to unit holders by developing and maintaining a culture that embeds risk management within operations", Mr Somogyi said.

Mr Somogyi added, "If providers are taking their responsibilities seriously, we expect to find sound understanding of good practice in unit pricing demonstrated at all levels of the organisation and a strong commitment to the implementation of effective and equitable unit pricing".

APRA and ASIC will continue to review aspects of unit pricing practice as a part of ongoing regulatory monitoring and expect that product providers will follow the good practices described in the guide. The regulators acknowledge that there may be circumstances in which alternative practices are appropriate. In such cases, product providers are expected to have a reasonable and well‑documented justification for adopting alternative practices.

Background
Further detail is provided in the attachment and in the guide. Between them, APRA and ASIC have regulatory responsibilities for aspects of life insurance, superannuation and managed funds. The finalised guide follows receipt of industry submissions on a draft consultation paper issued by APRA and ASIC in December 2004.

For further information contact:
Pauline Hayes, Public Affairs Manager, APRA 
Telephone: 02 9210 3143
Mobile: 0417 528660

Angela Friend, ASIC Media Unit
Telephone: 03 9280 3338
Mobile: 0412 058 800

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Attachment
Strategic unit pricing issues for the board and senior management