Update to disclosure guidance for shorter PDSs
The Australian Securities and Investments Commission has updated its guidance in Information Sheet 155 about complying with the Shorter Product Disclosure Statement (Shorter PDS) regime. The updated guidance reflects findings from ASIC’s recent review of a sample of Shorter PDSs.
Background
Updated guidance
- Clarification that a Shorter PDS cannot be updated by the use of a supplementary PDS.
- Clarification of the font size to be used in a Shorter PDS (it must be at least 9 points, except for certain specified words and numbers that must be at least 8 points).
- Suggestions on how to ensure that prescribed warnings are prominent and are formatted to attract consumers’ attention (for example, increasing the font size of warnings, inserting a warning symbol next to them, changing their colour or inserting a box around them).
- ASIC’s view on disclosing whether and how investment options in a product may change. ASIC interprets this disclosure as requiring a Shorter PDS to 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. (In our view, this disclosure can be made in the Shorter PDS itself or incorporated by reference.)
- Reinforcement of ASIC’s view that the Standard Risk Measure (SRM) should be disclosed in the Shorter PDS itself, rather than incorporated by reference (although other components of the SRM, such as an explanation of what it is, its limitations and its methodology, could be incorporated by reference).
- Clarification that where an employer-sponsored member of a superannuation fund is transferred to another division of the fund upon leaving employment, any potential increase in fees or insurance premiums and any reduction in benefits is either a significant feature or a risk, and therefore must be disclosed in a Shorter PDS.
- Clarification that where a superannuation fund has an accumulation division and a pension division and the same Shorter PDS is used for both, the PDS must give similar prominence to both the accumulation and the pension features.
- Acknowledgement that some MySuper products will require their own Shorter PDS (where they are a ‘stand-alone’ product).
- A Shorter PDS must explain the ‘cooling-off’ period. This includes a Shorter PDS for a public offer superannuation fund, unless the PDS is intended only for employer-sponsored members.
- ASIC may consider it misleading where a Shorter PDS for a product with both benefits and costs only refers to the product’s benefits.
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