Six-page PDS not long enough, says ASFA

Work undertaken by the Government’s Financial Services Working Group to reduce the size of Product Disclosure Statements (PDSs) to no more than six pages has been questioned by the Association of Superannuation Funds of Australia (ASFA) on the basis that complex products cannot be explained so concisely.

In a submission to the Treasury, ASFA has not only expressed concern at the six-page limitation on the new PDS templates but said it was very concerned “that there is a considerable amount of prescribed generic educational information in the PDS [that] relates to superannuation generally and too little information about the specific product offering”.

Dealing with the adequacy of what could be contained in a six-page PDS, ASFA said it was concerned that given the complexity and diversity of products being covered, the six-page limitation would “lead to documents that do not achieve the primary aims of ensuring that individuals understand the key features, costs and risks of the product and [allow] individuals to make valid comparisons between products”.

The ASFA submission said while the organisation acknowledged there needed to be a balance between producing incomprehensible and/or long documents with overly-simple inadequate disclosure, there were risks associated with oversimplification.

ASFA said it believed the minimum PDS length should be longer than six pages, and should be allowed to extend to 12 pages.