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Focus: Funds Management – April 2008
Facilitating online financial services disclosure
In brief: The
Australian Securities and Investments Commission
(ASIC) is proposing
exemptions to make it easier to provide some financial services information electronically.
Partner Susan Burns (view CV) and Senior Associate Penelope Barclay explain what is proposed.
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How does it affect you?
- ASIC is proposing exemptions that are designed
to make it clear that product disclosure statements, financial services
guides and other financial services information can be made available by
sending emails with hyperlinks or notifying that the information is
available on a website.
- The exemptions will not apply to prospectuses.
- Some of the conditions to the proposed relief may cause additional
cost or practical difficulties. ASIC is keen to receive submissions on
whether this will be the case.
- ASIC is concerned that allowing increased use of hyperlinks
may make 'phishing' and other internet scams easier. It has asked
for suggestions as to how this risk can be minimised.
- Relief is also proposed for superannuation entities so that website
access is the default method for delivering annual superannuation
information.
- Comments on the ASIC proposals are due by 28 May
2008
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ASIC has issued Consultation Paper 93, Facilitating
online financial services disclosure, in which it outlines general relief
to facilitate online financial services disclosure required under Parts 7.6 to
7.9 of the Corporations Act 2001 (Cth) for financial services guides
(FSGs) and product disclosure statements
(PDSs)1.
ASIC considers that the law also permits Parts 7.6 – 7.9 information to be
sent as email text, email attachment or fax where the client has nominated an
electronic email address or fax number. However, 'there is a view that the
current provisions of Parts 7.6 – 7.9 do not permit sending information by
sending the client an email containing:
- a hyperlink
to the relevant information; or
- a website address and instruction on how to find
the relevant information on the website.'
Under the proposed relief, providers will be permitted to supply investors
with:
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FSGs, supplementary FSGs, statements of advice,
PDSs and supplementary PDSs;
- periodic statements;
- transaction confirmations;
- additional information that they have requested and
additional information provided by superannuation fund trustees; and
- unsolicited offers to purchase financial products off-market,
by:
- hyperlink; or
- notifying investors that the information is available on a given website
address,
on condition that2:
- consent to electronic delivery has been positive,
express and clear;
- the content of the
information being provided this way is clearly identified – eg that it is a
PDS or FSG etc;
- it is easy for the investor to retrieve, read and
print the information and to keep a copy;
- the information is easy to find and will be available
for a reasonable period; and
- emails must include a statement that the client can request a paper copy
of the information at no cost.
Privacy and document retention requirements will continue to apply to all
information provided electronically.
ASIC is also considering related relief to enable superannuation fund
trustees to use a website address as the default method of
furnishing annual information to members – members will have to actively
elect to receive a hard copy of their annual report. ASIC's rationale
is that this approach is now permitted under the Corporations Act for annual
reports by companies, registered managed investment schemes and disclosing
entities.
This relief will be granted subject to the following conditions:
- the trustee must notify each member at least once
that:
- they can elect to receive, free of charge, a copy of
the annual superannuation information either as a hard copy or
electronically; and
- if they make no election, that the member can access the information on
a specified website;
- the member must be able to change their mind about
whether they want to receive the information electronically;
- the trustee must provide a hard copy of the annual
information to all members who elect to receive the information in this manner
and an electronic copy to those who have chosen to receive the information
that way;
- a copy of the annual information must be readily
accessible on a website; and
- the trustee must notify all members who do not make an
election that they can:
- access a copy of the annual superannuation
information on a website; and
- elect to receive a hard or electronic copy of the information, free of
charge.
These conditions are intended to reflect the requirements that apply to
companies, registered schemes and disclosing entities.
ASIC requires comments on the consultation paper by 28 May 2008.
Footnotes
- Not yet elsewhere in the Corporations
Act – for example, Chapter 6D
(Prospectuses) but ASIC is keen to understand whether the same need applies to
other information.
- ASIC also provides a list of basic principles when using emails and the
internet to send information. These are reflected in the conditions that
additionally suggested that clients should b allowed to change their
mind.
For further information, please contact:
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