Most super providers fail disclosure test

By Ross Kelly

MOST superannuation product providers have recently issued deficient product disclosure statements (PDSs), the corporate regulator has discovered.

“We found problems of varying degrees in 70 per cent of the 100 PDSs we reviewed from various organisations,” AustralianSecurities and Investments Commission (ASIC) executive director compliance Jennifer O’Donnell said.

The PDS reviews were undertaken by ASIC following the introduction of choice of fund legislation in July 2005.

Problems included a failure to provide sufficient information about risk associated with the product, the provision of out-of-date information, the use of past performance to predict future performance and a failure to provide correctly formatted information about fees and worked dollar examples.

O’Donnell said most of the 70 per cent of reviewed provider’s problems had been resolved quietly with ASIC.

She said most of the errors in PDSs were isolated to just one area — either risk, past performance, fee or out-of-date disclosure.

“No one had problems in all of these areas,” she said.

O’Donnell did not reveal which providers were found to be issuing incorrect PDSs.

In February, ASIC said it had pulled up low cost superannuation providers Virgin and max Super over a failure to adequately disclose costs of their products in advertising — problems rectified by the providers immediately.

O’Donnell warned that any future breaches of a similar nature might not be treated as lightly by the regulator.