TheInvestment and Financial Services Association(IFSA) has released two model Product Disclosure Statements (PDS) to assist product issuers in developing disclosure documents that comply with Financial Services Reform regulations and are easy for consumers to understand.
The two model PDS’s are for a managed investment product and a retail superannuation product, and provide guidelines on good practice in terms of layout, content and style.
The documents were developed by the IFSA PDS Working Group, which comprised product and marketing professionals from IFSA member companies, as well as compliance specialists from several leading law firms.
The model managed investment PDS was presented to theAustralian Securities and Investments Commission(ASIC) for feedback, which IFSA chief executive Richard Gilbert says was “very constructive” and incorporated into the model documents.
“We wanted to provide product issuers with the most reliable information on regulatory issues, and a simple and concise document for consumers – there’s no reason why companies should have 40 or 50 page prospectuses,” Gilbert says.
One of the most useful aspects of the model PDS’s, according to Gilbert, is the inclusion of ASIC’s recently released fee schedule.
However Gilbert stresses that as every product provider will have differentiating factors they are not “one size fits all” documents, but says “they do provide a good set of goalposts, which have been very closely looked at by ASIC to ensure they’re in the right location”.
IFSA will be conducting consumer testing of the superannuation PDS to assess its effectiveness as a communication device, and during the development process consulted extensively with the Australian Consumers’ Association on the extent and method of fee disclosure and the need for dollar examples in the PDS.
IFSA is also developing a model PDS for life insurance risk products, which should be finalised this month.
