ASIC opens consultation on PDS simplification
The Australian Securities and Investments Commission (ASIC) has taken another step towards simplifying the regulatory regime around Product Disclosure Statements (PDSs), announcing proposed changes to its regulatory guidance.
The regulator has announced a consultative process around a proposed update to Regulatory Guide 169 which includes a simplified approach for financial advisers and licensees.
Among the changes being proposed by ASIC is the incorporation of guidance into one document and the removal of guidance relating to Financial Services Guides (FSG) and Statements of Advice (SOAs) which it acknowledges is already covered by other guidance.
It said it also proposed to amend and cross-reference information on fees and costs while clarifying the legislative basis for the current Good Disclosure Principles and reframing the existing guidance on misleading and deceptive conduct to highlight examples of general disclosure concerns with PDSs, without changing its substance.
ASIC said that the information sheets and regulatory guides containing other PDS disclosure, lodgement and notification guidance that it proposes to incorporate will become redundant and it then listed the guidance it proposes to withdraw.
ASIC has provided stakeholders with a deadline of 6 August to give feedback on its proposed changes, noting that “we are particularly interested in receiving feedback on whether there is other PDS guidance that should be incorporated in RG 168, other ways we could simplify the guidance, or if there is guidance proposed to be withdrawn from RG 168 that should be retained and why”.
Announcing the consultation process, ASIC said it was part of its commitment to reducing regulatory complexity, enhancing clarity and improving accessibility for all stakeholders.
“ASIC recognises that regulatory complexity is a significant challenge, and simplifying guidance improves the industry’s ability to prepare Product Disclosure Statements (PDSs).
The proposed updates include:
- incorporating guidance on PDS disclosure, lodgement and notification obligations from other RGs and information sheets into RG 168
- withdrawing information sheets and RGs containing other PDS disclosure, lodgement and notification guidance proposed to be incorporated into the updated RG 168
- removing guidance in RG 168 relating to Financial Services Guides and Statements of Advice
- reframing the existing guidance on misleading and deceptive conduct in RG 168 to highlight examples of general disclosure concerns with PDSs, and
- clarifying the legislative basis for the Good Disclosure Principles in RG 168.
How about a simple change. If advice was originally provided in Australia then you CAN issue a new PDS to someone who is not presently in Australia. I’ve got clients O/s that we’ve had to have mum or dad added as PoA just so we can continue to manage the money as son/daughter has moved overseas for a while. This is a rule for rules sake. Total waste of time and effort and yet more danish cheesecake regulation…..layer upon layer.
Whatever the amendment is, please, fit it all on one single a4 page.
didn’t ASIC mandated short form PDS’s decades ago, then exempted many PDS’s ????
ASIC will release another 165 page Reg Guide on simplification :-/
ASIC Morons love creating Red Freaking Tape and when they say they will reduce it they end up just adding to it.
End result with be further complication as it always is with ASIC
Yet another NEEDLESS (and undoubtedly and deliberately) costly avenue to generate MORE money by ASIC at the expense of the industry’s adviser’s is all I see here.
Another expensive talkfest paid for by…..
Either way the lawyers will take a massive cut, at the expense of advisers .
When an insurance PDS occupies 140 pages, we have lost the plot. It’s essentially now an exercise in arse-protecting by the legal eagles working for the insurers. The insurers have all lost any intention to limit the verbiage because they are no longer printing these treatises of war and peace. It’s now down to Advisers to put an electronic link in a SOA hoping that the client will actually click on the link, and then have the fortitude to scribe through 140 pages on the screen with no clue as to what they’re actually looking for.
I know that puts me to sleep, and I’m actually interested in the content.
Seems to me that one of the better ways to do it would be to analyse what the client is about to purchase. Is it life cover, with or without TPD cover, with or without trauma cover, or just IP in isolation?. The Adviser should be able to go on the insurer’s website, tick the actual products the client is about to purchase, deselect from the end product PDS those products that are not being recommended, and create a modified link. For example if the client just wants $1 million of life cover, but no TPD and trauma, plus IP, there should be nothing in the generated link about trauma or TPD.
The PDSs long ago degenerated into a marketing exercise by our friendly insurers, and the infamous attempt, two decades ago, to introduce “plain English” PDSs(ACL), has long ago disappeared up its fundamental. Never stood a chance with lawyers, and actuaries, involved
The other contributing factor is that insurers are looking to save money not only by not providing hard copies of PDSs but also attempting to provide a consumer document that serves the purpose of both a PDS and a policy document. Which means the heavy duty detail of the policy document floods out the PDS purpose of providing general informationTo clients who barely understand the concept of insurance.
Insurers should be directed to go back to the previous arrangement: a PDS was a plain speaking document giving a framework of the product to the client and the policy document was the source of wisdom when the music stopped
Can’t see ASIC agreeing to that proposition though, sounds too easy for a regulator populated mainly by persons holding legal degrees, but rarely with any practice experience