Clear language for financial products
MINISTER for Financial Services Bill Shorten has taken the garden shears to product disclosure statements.
Product disclosure statements are required for all financial products, but have traditionally been written in long, hard to understand, language.
The SPDS regime is set to take full force on 22 June 2012, and will ensure that disclosure for certain financial products - including superannuation and simple managed investment schemes - is presented in a short and simple way that equips consumers to make better financial decisions.
"While the SPDS regime will help Australian investors understand the key costs, risks and features of superannuation and managed investment scheme products, the Government is aware that the financial services industry is dealing with a number of implementation issues in moving to the new SPDS regulations for superannuation platforms and multifunds," Minister Shorten said.
To ease the transition to the new regulations, the Government is still in talks with the finance industry to determine what should be completely out of the shorter PDS regime and what should stay in the regime but with modified content requirements.
In the meantime:
- Superannuation platforms will be excluded from the SPDS regime, however relief will be provided by ASIC so that superannuation platforms can, on the discretion of the provider, be included in the SPDS regime; and
- Multifunds will also be excluded from the SPDS regime, however relief will also be provided so that multifunds can at the discretion of the provider, be included in the SPDS regime.
Finally, the Government reiterated that other complex products such as hedge funds will continue to remain excluded from the SPDS regime, in accordance with the original policy intent, until these products can be fully considered in respect of the policy intent of the SPDS regime.
"We need to keep in mind that while the shorter disclosure documents work well for relatively simple financial products, complex products often have features and risks that can't be addressed in a short and simple manner," Mr Shorten said.
These continuing changes to disclosure build on the Government's commitments to deregulation and consumer protection, and complement the Future of Financial Advice and Stronger Super reforms.