ASIC updates disclosure guidelines

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Australian Securities and Investments Commission has updated its disclosure guidance for shorter Product Disclosure Statements (PDS).

The shorter PDS regime started in June last year, and since then ASIC has reviewed a sample of shorter PDS for superannuation and simple managed investment schemes.

It aimed to gauge how well PDS issuers were complying with the new regime and identify any measures needed to increase compliance, such as industry guidance.
ASIC found issuers made a good effort to comply and any non-compliance tended to be technical rather than substantive.

“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,” ASIC commissioner Greg Tanzer said.

To help, ASIC has updated Information Sheet 155, to do with superannuation products and simple managed investment schemes. Clarifications have been made to things including font size, formatting of ‘warnings’, insurance information, and how investment options may change.
In response to other common issues, ASIC reminds that shorter PDSs must explain the cooling-off period. This includes 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 said the PDS may be misleading unless it also refers to the cost.

PDS are critical to SMSF pension compliance. It provides superannuation fund members with details about the benefits, features and rules of the income stream.

Under the Corporations Law, all new SMSF members should receive a PDS on or before becoming a fund member. This is necessary because they receive a ‘superannuation interest’ at that time of joining. On starting an income stream, they will once again receive this interest.


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