Minister for Financial Services Stephen Jones (left) and Treasurer Jim Chalmers

The government will review the framework of the Your Future Your Super performance test, opening the door for a rethink of how fees on choice products are measured.

The consultation paper for the review was released on Friday and choice products – otherwise known as trustee directed products (TDPs) – were included in the last testing round which faced criticism from the industry for how fees were measured, along with potential CGT implications if advised clients had to move out of a failed product.

The test found the median administration fees and costs for platform TDPs were the highest at 0.54 per cent of assets, compared to 0.27 per cent for non-platform TDPs and 0.26 per cent for MySuper products, but this was based on a balance of $50,000 and didn’t take into consideration lower variable fees for larger investments.

But the consultation asks how fees should be measured under each design option, and whether peer comparison is the best method of measurement.

It also seeks additional feedback on whether the current assumptions made in comparing fees is appropriate, even suggesting the $50,000 figure be adjusted based on the median member balance for a product cohort.

“In extending the test to TDPs, some stakeholders raised concerns with testing administration fees at the investment option level, given some of the complex business and fee arrangements that occur in the choice sector,” the consultation paper said.

“Further, some members may invest in multiple investment options within their account, a practice that is more common in the choice segment, particularly platforms.”

AMP and Insignia Financial were the most caught out by the inclusion of choice products in the test, having operated 75 per cent of the failed funds.

In a statement sent out by an AMP spokesperson, it said the organisation welcomes the review noting previous concerns about test for TDPs.

“Rather than apply a ‘one size fits all’ methodology, the test needs to recognise the importance of choice for members and that products are designed with different risk and performance benchmarks to meet the differing needs of members,” the spokesperson said.