The financial services industry has been given yet another extension by the Australian Securities and Investments Commission (ASIC) to comply with its new dollar disclosure regime.
ASIC announced yesterday that the dollar disclosure requirements, which were set out in detail in new policy — Policy Statement 182, will now come into effect on July 1, 2005.
This is the second time the financial services industry has been given extra time to update its systems in order to cope with the new requirements, which were originally meant to come into force on January 1, 2005.
PS 182 requires product issuers and advisers to disclose costs, fees, charges, expenses, benefits and interests as an amount in dollars — unless making the disclosure is impossible or is deemed by ASIC to be unreasonably burdensome.
“ASIC recognises that in some limited circumstances there are compelling reasons why dollar disclosure is impossible, unreasonably burdensome or not in the interests of clients,” said ASIC executive director policy and markets regulation Malcolm Rodgers.
Items reliant on unknown facts or circumstances, amounts denominated in foreign currency, costs of derivatives, foreign exchange contracts, and general insurance and risk insurance products will not have to be disclosed to clients under the new regime.
“Just say you’re buying insurance from AAMI. The product disclosure statement produced by them is normally directed to a whole audience of potential purchasers, so they can’t tell you in a product disclosure statement what it’s going to cost for you in dollars,” Rodgers said.
He said that non-monetary benefits and interests, otherwise known as soft dollar payments, will also be exempt, although ‘rough estimates’ rather than exact dollar values will still have to be included in product disclosure statements.
“Many soft dollars are in forms where it’s not easy to say what the value is. For example, you could say ‘If I sell a certain volume I am entitled to a holiday and that holiday will be roughly around $3,500’. Now strictly speaking, $3,500 is not in dollar terms because with the dollar term requirement you need to be exact, but it is a reasonable estimation.”
