ASIC has issued guidance to assist issuers of superannuation products and simple managed investment schemes comply with the shorter product disclosure statement (PDS) regime.
The shorter PDS regime commences fully on 22 June 2012 and is designed to make PDSs shorter and simpler, and help consumers compare financial products more easily. Issuers of new products have been required to comply with the regime since 22 June 2011 and other product issuers have been able to voluntarily opt-in.
‘Reducing lengthy PDSs of up to 100 pages for superannuation and managed investment products to eight pages is a great improvement for consumers and business,’ ASIC Commissioner John Price said.
ASIC has published Shorter PDSs: Complying with requirements for superannuation products and simple managed investment schemes (INFO 155) to provide concise guidance for industry on technical issues related to implementation of the new shorter PDS regime.
ASIC has also updated Shorter PDS regime: Superannuation, managed investment schemes and margin lending (INFO 133) to reflect the amendments to the transition period implemented by the Corporations Legislation Amendment Regulations 2011 (No.2).
Mr Price noted that industry participants were still considering some aspects of the application of the shorter PDS regime.
‘We are continuing to speak with industry and monitor the situation to see how people respond to these changes. ASIC will take a facilitative approach to compliance for the first six months after the shorter PDS regime commences on 22 June 2012’, Mr Price said.
‘Provided industry participants are making a reasonable effort to comply with the shorter PDS regime, ASIC will adopt a measured approach where inadvertent breaches result from a misunderstanding of requirements or systems issues.
‘However, where ASIC finds deliberate and systemic breaches, we will take stronger regulatory action’, Mr Price said.
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Class order relief
ASIC will also provide interim class order relief from the shorter PDS regime for multifunds, superannuation platforms and hedge funds. This relief only comes into effect once the class order has been registered – meaning that it has been recorded on the Federal Register of Legislative Instruments which may be accessed at www.frli.gov.au. The relief in Class Order [CO 12/749] means that issuers of these products will remain subject to the disclosure provisions under Chapter 7 of the Corporations Act.
This relief is for an interim period only pending a future Government decision on the appropriate regulation of these products.
ASIC’s relief applies on an interim basis for 12 months, and may be reviewed earlier upon the making of regulations by Government.
Download Class Order [CO 12/749] and Explanatory Statement
Updated regulatory guides
To reflect the new shorter PDS regime, ASIC has updated:
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Regulatory Guide 91 Horse racing and breeding schemes (RG 91)
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Regulatory Guide 160 Time-sharing schemes (RG 160), and
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Regulatory Guide 173 Disclosure for on-sale of securities and other financial products (RG 173).
RG 91 relates to horse racing and breeding schemes and the shorter PDS regime does not apply as these schemes do not fall within the definition of a simple managed investment scheme.
RG 160 explains our approach to regulating time-sharing schemes under the Corporations Act. The shorter PDS regime does not apply as these schemes do not fall within the definition of a simple managed investment scheme.
RG 173 explains our approach to granting relief from the on-sale of securities and other financial products provisions in the Corporations Act.
Background
The Corporations Amendment Regulations 2010 (No 5) established a new shorter Product Disclosure Statement regime under Subdivision 4.2B (for superannuation products) and Subdivision 4.2C (for simple managed investment schemes) of Division 4 of Part 7.9 of the Corporations Regulations 2001.
The new shorter PDS regime, commencing fully on 22 June 2012, mandates prescribed headings, a restricted maximum page length for the primary document and prescribed content, as well as an ‘incorporation by reference mechanism’ which permits additional information to be given to consumers and is deemed to form part of the PDS.
Late last year, the Minister for Financial Services and Superannuation, Bill Shorten, announced the Government would undertake further consultation with industry and consumer groups on shorter PDSs. The Government highlighted the need to determine whether certain products should be completely out of the shorter PDS regime or included with modified content requirements.
Download Ministerial Media Release 169: Shorter Product Disclosure Statements