13-318MR ASIC updates disclosure guidance for shorter PDSs
Wednesday 27 November 2013
After full commencement of the shorter Product Disclosure Statement (PDS) regime in June 2012, ASIC has reviewed a sample of shorter PDSs for superannuation and simple managed investment schemes.
Our aim was to gauge how well PDS issuers were complying with the new regime and identify any measures we might take to increase compliance, such as industry guidance. We found that issuers have made a good effort to comply with the regime and any non-compliance tended to be technical rather than substantive.
ASIC Commissioner Greg Tanzer said, ‘Some issuers have responded imaginatively to the requirements of the new regime to educate consumers, for example, about how superannuation works and the relationship between risk, return and investment time horizons. We are pleased to see initiatives that seek to improve consumer understanding.’
We did identify areas where industry may benefit from further guidance when preparing a shorter PDS and we have updated Information Sheet 155 Shorter PDSs: Complying with requirements for superannuation products and simple managed investment schemes (INFO 155) to reflect this.
INFO 155 provides concise guidance for industry on technical issues related to implementation of the product disclosure regime under Pt 7.9 of the Corporations Act 2001 (Corporations Act) and the related Corporations Regulations for superannuation products and simple managed investment schemes, referred to as ‘the shorter PDS regime’. Updates to INFO 155 post our review clarify:
page restrictions, font size and formatting of ‘warnings’
employer-sponsored members and employer PDSs
whether and how investment options may change, and
treatment of accumulation and pension interests in the one superannuation fund.
In response to other common issues identified the following points should also be considered when you prepare your shorter PDS:
Shorter PDSs must explain the cooling-off period. This includes shorter PDSs for public offer superannuation funds, unless intended only for employer-sponsored members.
If a product feature has a benefit and a cost and the PDS refers only to the benefit, ASIC’s view is that the PDS may be misleading unless it also refers to the cost.
ASIC has stop order powers in relation to PDSs (including shorter PDSs) that contain misleading or deceptive statements: see section 1020E of the Corporations Act.
Stronger Super reforms soon to be implemented will affect PDS fee disclosure in both superannuation and managed investments.