Shorter PDS regime extended

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Australian Securities and Investments Commission has extended the relief period of the shorter Product Disclosure Statement regime for multi-funds, superannuation platforms and hedge funds.
The shorter PDS regime was scheduled to run for two years until 22 June this year.
However, yesterday ASIC announced an extension to 30 June, 2015, due to a pending  Australian government decision on whether the shorter PDS regime should apply to superannuation platforms, multi-funds and hedge funds.

The full PDS requirements under the Corporations Act 2001 apply to products that have been excluded from the shorter PDS regime. 

The 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.

To help, in November ASIC 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 Act, 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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