The Australian Securities and Investments Commission (ASIC) today confirmed that it expects key disclosure documents produced by financial services providers to be clear, concise and effective.

‘Some industry participants have told us that their lawyers are advising them to produce Statements of Advice (SOAs) running to 80 or 90 pages in order to comply with the requirements of financial services regulation. This is not what we would expect to see under the law, and it is not helpful to consumers. ASIC sees disclosure under the new law as a consumer-centric regime, focussing on the consumer’s information needs’, ASIC Executive Director of Financial Services Regulation, Mr Ian Johnston said..

ASIC has already issued guidance about disclosure documents such as Financial Services Guides, Statements of Advice and Product Disclosure Statements (See Policy Statement 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) and Policy Statement 175 Licensing: Financial product advisers – conduct and disclosure).

‘In ASIC’s view, the law is clear about what needs to be contained in such documents. However, if product issuers and advisors believe they need to produce overly complex documents in order to comply with the law, ASIC is prepared to consult with them and issue further guidance’, Mr Johnston said.

Responding to some media comment about when an advisor might have to provide a SOA to clients, Mr Johnston said, ‘It is not the case that a SOA needs to be provided every time an advisor talks to a client. Often those discussions will be about the existing investment strategy for the client with no further advice being given, for which the existing SOA my well suffice’, he said.

ASIC also confirmed that a SOA need not always take the same form. In many circumstances, it will be acceptable to update advice in a shorter document, referring back to the original, more comprehensive SOA.

ASIC understands that many financial service providers will take a conservative course and produce documents which are ‘boiler-plate’. ASIC has asked the Financial Planning Association to provide it with examples of SOAs it considers overly long and complex.

‘However, we are also aware of examples which are in a shorter form and which correctly balance the disclosure of all information the client needs, with the requirements for the information to be presented in a clear, concise and effective manner’, Mr Johnston said.

‘These are the sort of issues ASIC will consult on in the next few weeks, following the full commencement of the new regime tomorrow’, he said.