media release

IR 04-67 ASIC issues dollar disclosure policy

Published 15 December 2004

The Australian Securities and Investments Commission (ASIC) today announced how it expects providing entities and product issuers to comply with the dollar disclosure regime. This is set out in a new policy, Policy Statement 182 Dollar Disclosure [PS 182].

ASIC also announced the limited transitional relief it has granted from the dollar disclosure and other related provisions.

The dollar disclosure regime requires those who provide personal advice and product issuers to disclose various costs, fees, charges, expenses, benefits and interests as amounts in dollars.

‘The dollar disclosure regime provides consumers with important information in a way that encourages better informed decision-making’, ASIC’s Executive Director of Policy and Markets Regulation, Mr Malcolm Rodgers said.

‘Disclosure in dollars will be required in most circumstances. However, 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. For these situations, we have provided relief as Parliament envisaged when it made the dollar disclosure provisions’, Mr Rodgers said.

The policy statement describes the limited class order relief ASIC has granted, including relief for:

disclosure items contingent on unknown facts and circumstances [CO 04/1430];
costs of derivatives, foreign exchange contracts, general insurance products and life risk insurance products [CO 04/1431];
interest payable on deposit products [CO 04/1432];
non-monetary benefits and interests [CO 04/1433]; and
amounts denominated in a foreign currency [CO 04/1435].

‘It is important that industry comply with the dollar disclosure regime so that consumers receive full and helpful information about key fees and benefits.’

‘ASIC has granted relief that extends the transition to the dollar disclosure requirements to 1 July 2005. Our transitional relief allows additional time for industry to put systems in place to comply with the provisions. In doing so, we also remove the need for possibly two changes to systems to comply with the dollar disclosure provisions and the implementation of the Government’s ‘single fee measure’ package announced in June 2004’, Mr Rodgers added.

The attachment provides further detail regarding ASIC’s policy statement as well as the transitional relief that has been granted. A copy of PS 182 can be obtained from the ASIC website at www.asic.gov.au or by contacting the ASIC Infoline on 1300 300 630.

End of release

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Attachment to IR 04-67

The dollar disclosure regulations (Corporations Amendment Regulations 2004 (No 6)) were made on 24 June 2004 and are available at www.scaleplus.law.gov.au. The regulations commenced on gazettal and provide for a transition period to 1 January 2005.

The dollar disclosure provisions

Under the dollar disclosure provisions, providing entities and product issuers will be obliged to disclose various costs, fees, charges, expenses, benefits and interests as amounts in dollars in the following documents:

Statements of Advice (SOAs);
Product Disclosure Statements (PDSs); and
periodic statements.

In limited cases, ASIC can make a determination that a particular disclosure item need not be disclosed as an amount in dollars, but may be disclosed as:

a percentage of a specified matter; or
if the item cannot be disclosed as an amount in dollars or as a percentage, a description of the method of calculation of that item.

ASIC can only make a determination where, for compelling reasons, disclosure in dollars is:

not possible;
unreasonably burdensome, including within a specified period; or
not in the interests of a client or class of clients.

ASIC is also able to exercise its general exemption and modification powers in granting relief from the dollar disclosure requirements. ASIC intends to use it’s general exemption and modification powers to provide relief from specified dollar disclosure provisions only where, for compelling reasons, to require compliance with those provisions would be impossible, unreasonably burdensome, including within a specified period, or not in the interests of clients.

Policy proposal paper

PS 182 follows ASIC’s policy proposal paper (PPP) Dollar Disclosure published in August 2004. The PPP set out a number of propositions about:

how ASIC proposes to administer the dollar disclosure provisions;
the situations in which ASIC might consider granting relief from the dollar disclosure provisions on a class basis;
how ASIC proposes to assess applications for relief; and
potential approaches to transition.

PS 182 takes into account feedback received from the industry and consumer roundtables ASIC hosted in September 2004, as well as the 38 written submissions ASIC received on the PPP. ASIC acknowledges all those who provided feedback and made submissions on the PPP.

Our policy statement

To comply with the dollar disclosure requirements, ASIC provides guidance for providing entities and product issuers on what is an ‘amount in dollars’ and the appropriateness of ‘worked dollar examples’ (see Section A).

Section B of the policy outlines the limited class order relief ASIC has granted from the dollar disclosure requirements where it is satisfied that, for compelling reasons, compliance would be impossible, unreasonably burdensome or not in the interests of a client or class of clients. The circumstances in which this conditional relief applies include:

SOAs and PDSs, where the amount of the disclosure item is dependent on facts and circumstances that are not known to the providing entity or product issuer at the time the document is prepared, nor could it have been found out by the providing entity or product issuer. For example, trailing commissions or volume bonuses where the amount is dependent on unknown future matters [CO 04/1430];
PDSs, where the disclosure item involves costs associated with acquiring derivatives, foreign exchange contracts, general insurance products and life risk insurance products [CO 04/1431];
PDSs, where the disclosure item is a benefit that is the interest payable on a deposit product [CO 04/1432];
SOAs and PDSs, where the disclosure item is a non-monetary benefit or interest, for example, certain ‘soft dollar’ remuneration, a client’s ease of access to features of a product, or shares or options held by a providing entity [CO 04/1433]; and
SOAs, PDSs and periodic statements where the disclosure item involves amounts denominated in a foreign currency [CO 04/1435].

Section C of the policy contains guidance on when we will consider granting relief in circumstances other than those covered by the class order relief in Section B. This includes additional guidance where product issuers of legacy products may apply for relief for periodic statements beyond that granted under general transitional relief (see below).

Transitional relief

ASIC announced transitional relief on 7 October 2004, which provides industry with a further two-month extension of the transition period to 1 March 2005, see [IR 04–50] ‘ASIC announces transitional position on dollar disclosure’.

ASIC has now extended the transition period to 1 July 2005 under s951B and 1020F: [CO 04/1434]. This means that providing entities and product issuers are required to disclose items as amounts in dollars in SOAs, PDSs and periodic statements prepared on or after 1 July 2005.

Note: Generally, a document is prepared on the date its preparation is completed. A supplementary PDS must comply with the dollar disclosure provisions only where it corrects or updates a PDS prepared on or after 1 July 2005. Where a PDS consists of more than one part, the PDS is taken to be prepared when the preparation of the most recent part is completed.

ASIC has also provided further transitional class relief for issuers of periodic statements prepared before 1 July 2005 from compliance with the disclosure requirements related to common fund deductions of fees, charges or expenses stipulated in reg 7.9.19(g)–(j), 7.9.20(1)(kb) and 7.9.75(1)(b): [CO 04/1434].

These transitional measures have been implemented to provide industry with adequate time to make systems changes to comply with the dollar disclosure provisions, including the need to minimise the number of systems changes. This is particularly important against the backdrop of the Government’s plans on product disclosure to implement a ‘single fee measure’ package in the context of superannuation choice before 1 July 2005.

Note: The Government announced a single fee measure package on 16 June 2004 (see the Parliamentary Secretary to the Treasurer’s Media Release Simple disclosure of superannuation fees and charges).

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