Disclosure
People who provide financial products or financial services to retail clients have to follow disclosure rules. (They have replaced the pre-FSR system, where you had to make different disclosures for different products, and where different types of licensed providers were subject to different rules.)
Updated as at 11 March 2004.
The idea is that, because consumers must be given the same information about all products, they'll find it easier to compare quite different products; ie they get the same information whether they're investing in managed investments, public offer superannuation or life insurance.
The main requirements are:
- When you offer financial services to a retail client, you have to provide them with a financial services guide (FSG). However, an FSG does not need to be given in relation to a financial product by the issuer of that product where it is not also providing financial product advice or, in some cases, where the advice is only general advice in relation to the product.
- When you provide retail clients with personal financial advice, you have to give them a statement of advice (SOA).
- When you recommend or offer a product to a retail client, you have to give them a product disclosure statement (PDS) and give them any information you know might materially influence their decision to buy. The PDS must give specific information about the product, such as what benefits the holder can expect and taxation liabilities. In appropriate cases, multiple issuers of financial products who meet the requirements of ASIC class orders can prepare a single PDS in relation to their financial products. Also, in some circumstances, a FSG and a PDS can be combined into a single document. The combined FSG and PDS must be divided into two parts, one part containing the FSG information and the other part containing the PDS information, and there are a number of other requirements that must be satisfied.
There are also obligations relating to:
- periodic reporting;
- transaction confirmations;
- alternative dispute resolution;
- advertising; and
- cooling-off periods.
For an overview of your obligations to retail clients, see our table; for more on each document or obligation, see our short description page. Also, you may be interested in our report on the updated regulatory and policy requirements in relation to the disclosure of various amounts associated with financial products (such as costs, benefits, interests and service provider remuneration) as amounts in dollars in some disclosure documents. At this stage, the proposed regulations to implement the new dollar disclosure requirements are intended to take effect from 1 July 2004. However, there is pressure from industry and consumer groups to extend the commencement date and, in any case, concerns have been raised by the Opposition parties and others about how the Government is proposing to regulate this issue. To keep up–to–date with the latest developments, refer to our Breaking News.
