Superannuation providers are starting to migrate to the new short-form versions of product disclosure statements (PDS), ahead of compulsory legislation which will come into effect in 2012.
Speaking with Wealth Professional, Consumer Action Law Centre’s David Leermaker said anything which made PDSs easier to understand would be positive for clients.
“By nature, the products are complex and most consumers don’t have expertise in them. 50 pages and technical language isn’t much better than no disclosure at all… people don’t read them and if they do they don’t understand them…this can only be a step in the right direction,” he said
From June next year, statements must be kept to a maximum of eight pages of A4, and be constructed in a specific format to allow easy comparison with other products on the market.
This week AMP joined the growing list of providers pre-empting the proposal, and announced its products would be shifting to the new short-form PDS.
The new form of statement must also include a prominent statement near the beginning of the document, advising consumers that the PDS is a summary of significant and important information.
Consumer Action’s policy officer, Leermaker, said the increased standardisation of the statements would add a sense of clarity and also fuel fairer competition between products.
He said that other sectors should learn from the insurance issues that followed the Queensland floods in terms of dealing with their PDS’.
“I think that lesson spreads a lot further than insurance. That should tell everybody that people don’t read their PDS and don’t understand it," Leermaker said.
"You might want to take a high-ground position and say ‘people shouldn’t buy things they don’t understand’, but the fact is that these things are difficult to understand for most people, and if you want people to genuinely understand what you offer, and to make a rational choice, providers have to meet clients half way.”
'Do we have to read the PDS?'
Pearson's Punch: ASIC? Disclose this