Thinking | 28 August 2019
Product Disclosure Statement know how
When you roll your product disclosure statements (PDSs) this year you should consider how some of the key changes to superannuation over the last year may affect that disclosure. Our top ten tips for this year are set out below.
Adoption of the insurance code of practice
If you have chosen to adopt the Insurance in Superannuation Voluntary Code of Practice (Code) as discussed in our previous article then adoption of the Code may be a significant feature of your insurance offering, and there may be significant changes to your claims handling processes and even to your insurance offering. Along with the insurance description in your PDS, you should also consider any document incorporated by reference or insurance guide or fact sheet.
For your existing members, you may wish to issue a significant event notice to inform them of the changes to the insurance product and processes.
RG 97 fees and costs disclosure deferral
The very drawn our examination of fees and costs disclosure is continuing. ASIC announced in November 2017 that it would appoint an external expert to conduct a review of the fees and costs disclosure regime, with that review to be completed in mid 2018.
Accordingly, ASIC has announced it will continue its ‘facilitative compliance approach’ until 30 June 2019. So, until then, you do not need to implement any further changes to your disclosure of fees and costs, but if you have already implemented those changes, then you can and should continue with that disclosure and ensure that all your disclosures are consistent and reasonable.
Product dashboards deferral
Again, given all of the upheaval concerning disclosure, the requirement to publish product dashboards for choice products has been deferred until 1 July 2019.
Portfolio holdings disclosure deferral
Similarly, portfolio holdings disclosure has been deferred until 31 December 2019.
Fall out from the Banking Royal Commission
Following the Banking Royal Commission, you may want to disclose in your PDS that you will only continue to pay adviser fees if you receive ongoing consent from members that the fee arrangement remains in place and that the deduction of the fee is authorised. It may be sensible to include details of any fee arrangements for particular products in relevant application forms.
AFCA as the new external dispute resolution body
The Australian Financial Complaints Authority (AFCA) will replace the Superannuation Complaints Tribunal (SCT) to become the new relevant tribunal from 1 November 2018. This change may require an update to PDS documents providing new contact details as new complaints should be directed to the new entity from 1 November 2018. For a period you may wish to maintain contact details for both tribunals as there will be a transition period when existing complaints will remain with the SCT, but new complaints will move to AFCA.
You may wish to issue a significant event notice to inform your existing members of the change.
Given both the introduction of the Code, and AFCA late this year, it is an ideal time to review your claims and complaints handling policies and processes to ensure continued compliance.
Commencement of the notifiable data breach regime
Since 23 February 2018 superannuation funds have been subject to heightened privacy obligations in respect of actual or suspected data breaches and to ensure they:
- review and mediate suspected, or actual, data breaches
- notify the Information Commissioner and
- notify at risk individuals.
Disclosure to employers
From 1 July 2018 new education directions and stronger penalties may apply to employers who fail to correctly pay superannuation guarantee contributions.
Separately from your PDS review, you may wish to review disclosure and facts sheets regarding superannuation guarantee contributions and salary sacrifice. You may also consider reminding employers of their obligations and the additional data now being provided directly to the ATO via single touch payroll.
2018 annual budget
There have been a number of changes, but which will not take effect until 1 July 2019, including:
- Various fees will be changed (for example exit fees will be banned and passive fees on low balances will be capped), and certain inactive accounts must be rolled out to the ATO.
- Insurance for members under the age of 25 years must be offered as ‘opt-in’.
Going forward, Members should have access to a wider variety of retirement options and be provided with more information aimed at allowing them to compare and choose appropriate pension products.
Shorter PDS regime deferral
The ASIC exemption from the shorter PDS regime for various complex products (such as superannuation platform products) is due to expire on 30 June 2018. The date was extended from 30 June 2017 to allow for consultation, and so considering that consultation hasn’t yet taken place, the exemption may be further extended.
Any other recent matters which have altered or affected your financial products or processes should be considered and may need to be reflected in your PDS.
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