The U.S. Securities Industry Association has proposed a system of Web-based and toll-free telephone disclosure of brokerage firms’ relationships with mutual-fund companies.

The SIA made the proposal in a comment letter to the Securities and Exchange Commission.

The letter comes in response to the commission’s rule proposal on disclosure requirements for confirmations and point-of-sale. SIA says that it agrees with the SEC that investors should be informed in the confirmation of any additional compensation the sales professional may have received in connection with the transaction. The confirmation should also disclose any payment received “as a condition for the inclusion of the investment company on a preferred or select sales list, or similar grouping, in connection with any other sales program, or as a reimbursement or advancement of expenses.”

Investors would have access via the Web site or toll-free number to front end sales loads, back-end sales loads, first-year asset based sales charges, first-year asset-based service fees, sales fees, and breakpoint information.

The SIA recommends that this information should be presented both in terms of a standardized investment of US$1,000 and with an assumed return of 5% per year.

In addition, the firm would disclose any soft-dollar or directed-brokerage relationships the firm has with the brokerage firm, as well as any revenue- sharing or servicing relationships.

The SIA contends that “the commission should require brokerage firms to disclose mutual-fund expenses in a way that is consistent with, and comparable to, the expense disclosures mutual funds themselves make.” By having this information accessible on the Web or via a toll-free number, investors can make side-by-side comparisons of fund expenses and make an informed decision.

The SIA has also proposed soliciting direct input from investors in developing a “disclosure template”. “Systematic experimentation and feedback from investor focus groups with a number of disclosure formats would be most likely to yield the best approaches,” SIA’s letter states. “SIA stands ready to participate with the SEC and others in designing and implementing such market research.” Any efforts to solicit investor input into disclosure templates should involve a number of varying formats that investor groups can review, the association said.

“SIA strongly supports enhanced disclosure of mutual-fund economics as well as all other material aspects of mutual-fund investing, such as investment objectives, performance, and risk,” said George Kramer, SIA’s vice president and acting general counsel.