The Australian Securities and Investments Commission (ASIC) has invited public comment on its policy proposal regarding new dollar disclosure obligations. The policy proposal paper, ‘Dollar disclosure’, was released by ASIC today.

ASIC’s Executive Director of Policy and Markets Regulation, Mr Malcolm Rodgers said the law had been amended to require dollar disclosure from 1 January 2005.

‘Unless ASIC makes a determination that, for example, dollar disclosure is not possible, fees and benefits must be disclosed as amounts in dollars. This is an important measure to help consumers make informed decisions about the financial services and products they use’, Mr Rodgers said.

‘The dollar disclosure provisions set a high standard and require dollar disclosure other than in narrow circumstances. Even in those circumstances, the law requires clear disclosure using percentages or descriptions, and also requires worked dollar examples.’

‘We have been guided by the high importance the law places on dollar disclosure, and accordingly will be using our determination powers sparingly’, Mr Rodgers said.

The policy proposal paper sets out how ASIC plans to approach the dollar disclosure provisions together with how it proposes to use its power to make dollar disclosure determinations.

The paper discusses:

• how it will administer the dollar disclosure provisions;
• the situations ASIC might consider issuing dollar disclosure determinations on a class basis;
• how applications for determinations will be assessed by ASIC; and
• ASIC’s approach to transition.

Further detail on the policy proposal paper is set out in the attachment to this statement.

‘We encourage industry and consumers to comment on these important issues’, Mr Rodgers added.

ASIC expects licensees and product issuers to have plans for complying with the dollar disclosure obligations underway. The six-month transition period exists for licensees and product issuers to make any necessary adjustments to their systems, processes and documents so that they can comply with the dollar disclosure obligations. We have provided a short period for comment to help us finalise our policy as soon as possible.

Some licensees and product issuers have suggested they will experience difficulties in fully complying with the dollar disclosure obligations by 1 January 2005. ASIC’s policy proposal asks for information about the types of difficulties industry participants are facing. ASIC will consider whether it is unreasonably burdensome for them to fully comply by 1 January 2005. If so, it may consider extending the compliance date for a short period provided industry participants demonstrate they are taking steps to ensure they can comply with the dollar disclosure obligations.

ASIC will announce its decision on this transitional issue by the end of September.

A copy of the policy proposal paper is available from the ASIC website at www.asic.gov.au or by calling the ASIC Infoline on 1300 300 630.

End of release

Download a copy of the policy proposal paper

ATTACHMENT TO INFORMATION RELEASE 04-39

The regulations

The dollar disclosure regulations (Corporations Amendment Regulations 2004 (No 6)) were made on 24 June and are available from http://scaleplus.law.gov.au. The regulations commenced on gazettal and provide for a six-month transition period. More detail on the new disclosure regime, including when each part applies, is set out in Information Release IR 04-027: Next steps on dollar disclosure.

ASIC notes that the Government announced a single figure fee measure package on 16 June 2004 (see the Parliamentary Secretary to the Treasurer’s Media Release Simple disclosure of superannuation fees and charges). ASIC will take into account any implications this new package of proposed regulations may have for the implementation of the dollar disclosure obligations when developing its policy on the dollar disclosure obligations. This will include considering the effect of the Government mandating the use of ASIC’s revised fee disclosure template (issued on 16 June 2004; see ASIC Media Release 04-192: ASIC releases revised fee disclosure model).

Under the dollar disclosure provisions, providing entities and product issuers will be obliged to disclose various fees, benefits, costs 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 fee, cost, benefit or interest need not be disclosed as an amount in dollars. If a determination is made, the item needs to be disclosed by way of a percentage or description instead. ASIC can only make a determination where, for compelling reasons, disclosure in dollars is:

• not possible;
• unreasonably burdensome (including within a specified period); or
• contrary to client interests.

Our policy proposals

Our policy proposal paper summarises the dollar disclosure provisions. It considers in some detail our approach to the key concepts of ‘amount in dollars’ and ‘worked dollar examples’. For more information, see the section of the paper entitled ‘What are the dollar disclosure provisions?’ and Section A.

Our proposed approach to dollar disclosure determinations in cases where dollar disclosure is ‘not possible’ is set out in Section B of the paper. It sets out two cases where we propose to issue class determinations, being:

• where dollar disclosure is not possible because the amount depends on facts not known by and beyond the control of the providing entity or issuer; and
• where dollar disclosure is not possible because the item is an intangible client benefit (e.g. product benefits whose value cannot be converted into dollars).

The paper also explains how we will approach applications for a dollar disclosure determination where the applicant believes disclosure in dollars is not possible.

Our proposed approach to dollar disclosure determinations in cases where dollar disclosure is ‘unreasonably burdensome’ or ‘contrary to client interests’ is set out in Section C of the paper. We do not propose any class determinations under these powers. This section of the paper set out the factors that we propose to take into account in assessing applications for a dollar disclosure determination where the applicant believes disclosure in dollars is unreasonably burdensome or contrary to client interests. Unreasonable burden and contrary to client interests are high standards and we do not expect to make many determinations under these powers.

The approach to transition that we are thinking about and the use of our power to make determinations where dollar disclosure is ‘unreasonably burdensome within a specified period’ are set out in the section of the paper entitled ‘Transitional issues’. In this section, we contemplate making a determination that would provide for a short, conditional extension of the transition period from the commencement of the dollar disclosure provisions until 28 February 2005. A condition of the possible determination might be to require providing entities and product issuers to self-certify (at a senior management level) that they have reasonable grounds to believe that:

We will announce our decision about any determination we are considering on transition by the end of September.

We propose to publish our final policy statement in October or November.

Download a copy of the policy proposal paper