ASIC updates disclosure guidance for shorter Product Disclosure Statements

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29 November 2013 | By Michael Chaaya (Partner)

NEED TO KNOW

On 27 November 2013, ASIC released updated ASIC Information Sheet 155 Shorter PDSs: Complying with requirements for superannuation products and simple managed investment schemes (ASIC INFO 155) to clarify guidance on technical issues related to the implementation of the shorter Product Disclosure Statement regime (shorter PDS regime).

BACKGROUND

The Corporations Regulations 2001 (Cth) (Corporations Regulations) were amended by the Corporations Amendment Regulations 2010 (No 5) (Cth) to establish a shorter PDS regime for superannuation products (other than risk-only products) and simple managed investment schemes.  The shorter PDS regime commenced fully on 22 June 2012 and requires a PDS to be a maximum of 8 A4 pages and to comply with heading and content requirements. 

On commencement of the regime, ASIC released ASIC INFO 155 to provide concise guidance on the shorter PDS requirements as well as on certain topics such as incorporation by reference, ‘white label’ products, employer PDSs and insurance information. 

As a part of its review work, ASIC has reviewed a sample of shorter PDSs to gauge compliance and to identify any need for further industry guidance.  As a result of that review, ASIC has updated ASIC INFO 155 to clarify its guidance on technical issues related to implementation of the shorter PDS regime. 

SUMMARY

The table below summaries the updates to ASIC INFO 155.

Updated or new topic

Summary of update

Font size

  • The font size in the primary document for the issuer’s name, address, ACN, ABN or AFS licence number must be at least 8 points.
  • All information other than the above in the primary document must be at least 9 points.
  • PDS issuers should ensure the print is not too pale or faint.  

Warnings

  • Shorter PDS warnings required by Schedules 10D and 10E of the Corporations Regulations must be prominent. 
  • Examples of formatting to create emphasis include increasing font size, changing the font colour, inserting a warning symbol or using a coloured background.

Whether and how investment options may change

The shorter PDS must state whether the trustee or responsible entity can add, close or alter investment options and, if so, what notice will be given to members or investors.

Employer-sponsored members

If a superannuation fund trustee may transfer an employer-sponsored member who has left their employer to another division of the fund:

  • any potential fee or premium increase or any loss of benefits should be disclosed in section 3 of the shorter PDS as significant features of the superannuation product; or
  • the consequences of a member leaving their employer may alternatively be disclosed in section 4 of the shorter PDS alongside the risks of superannuation.

Stronger Super

Issuers of shorter PDSs need to be aware of changes to fee disclosure arrangements under Stronger Super.

Accumulation and pension interests in the same superannuation fund

If a shorter PDS covers both an accumulation division and a pension division in the superannuation fund, the PDS should give similar prominence to the features of both divisions.

In ASIC Media Release 13-318MR ASIC updates disclosure guidance for shorter PDSs, ASIC identified the following points should also be considered by issuers of shorter PDSs:

  • unless the shorter PDS is intended only for employer-sponsored members, all shorter PDSs must explain the cooling-off period; and
  • PDSs must refer to both the benefit and cost of a product or ASIC’s view is that the PDS may be misleading or deceptive. 

TIMING OF UPDATES

The updates in ASIC INFO 155 are effective as of 27 November 2013. 

NEXT STEPS

Trustees and responsible entities of funds operating under the shorter PDS regime should review their shorter PDSs to ensure compliance with the technical aspects of the regime. 

We are available to provide you with further information or guidance about this issue.

Please contact a team member listed to the right.

 


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Michael Chaaya

Partner. Sydney
+61 2 9210 6627

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Joanne Dwyer

Special Counsel. Brisbane
+61 7 3228 9375

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Christine Maher

Consultant. Brisbane
+61 7 3228 9413

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