The new "short and simple" PDS regime for
superannuation products commences on 22 June 2011. This is the
first general overhaul of these requirements since 2002, when FSR
commenced. Unfortunately for trustees, implementing the new regime
will not be so simple. Nor can it be done in a short time. Trustees
need to start acting now.
The requirements for Product Disclosure Statements (PDSs) for
superannuation products (other than products that are solely an
interest in a defined benefits fund or solely a pension product)
have changed. These changes are intended to make PDSs for
superannuation products "substantially shorter and
simpler" than current PDSs.1
Not so short and simple
This "shorter and simpler" tag, coupled with the
delayed commencement of the new regime, may have lulled some
trustees into thinking that nothing needs to be done now, as
whatever has to be done can be done later, by following a
"tick-a-box" checklist approach. However, the theoretical
and practical complexities of the new regime demand that trustees
devote substantial management resources to implementing the new
requirements at an early stage.
Project team and project plan
This is a major project for trustees. Product, distribution,
marketing, administration, systems, compliance and legal staff will
all need to be involved. Establishing a project team is a
The new regime commences in 2 stages. All new PDSs must
comply from 22 June 2011 (stage 1). (This has
broad reach, as no Supplementary PDSs can be given from 22 June
2011.) All PDSs must comply from 22 June 2012 (stage
2). There may be some products for which a new PDS can
wait until stage 2, rather than being dealt with at stage 1. Having
a project plan which, among other things, identifies whether
products will be dealt with at stage 1 or 2 is essential.
Some of the numerous implementation issues are:
writing an updated PDS due diligence procedure which addresses
the new requirements, and which requires that the structure of new
PDSs to be "mapped out" and all decisions and steps taken
be properly recorded
identifying prescribed information to be included in the
"actual" PDS of 8 pages maximum
identifying prescribed information to be incorporated in the
PDS by reference
identifying non-prescribed information to be included in the
actual PDS or incorporated by reference
identifying non-prescribed information to be referred to in the
PDS but not incorporated by reference (called
identifying information outside the actual PDS that is to be
given to members in hard copy, along with the actual PDS.
Information in this category is likely to include information about
death benefit nominations and may include information about
insurance. There will need to be discussions with the insurer
making disclosures under other legislation, such as illiquid
investment disclosure under reg 6.34(7) of the Superannuation
Industry (Supervision) Regulations 1994 (Cth) and giving a
privacy notice under National Privacy Principle 1.3
verifying the statements in the actual PDS, the information
that is incorporated by reference, and the referenced
creating compliant and functional website pages
establishing a program for the regular testing of all website
training call centre and complaints staff
communications with advisers, and
reviewing due diligence committee charters.
Our PDS checklist
We have prepared a legal checklist of the new requirements. The
key strengths of our checklist are:
it quotes, rather than merely paraphrases, the actual text of
the legal requirements
it shows both the new PDS requirements and such of the older
PDS requirements as have survived, in a single checklist
it includes passages from the Explanatory Statement, where
these clarify or expand on the meaning of the text used in the new
it is self-contained, in the sense that the relevant legal
requirements are set out in full.
How we can assist you
We can assist you in these ways:
by providing you with our template PDS checklist
by providing legal advice to your project team, including
advising on specific issues
by providing legal sign-off on your new PDSs
by reviewing your PDS due diligence procedures and training
by participating in training and workshop sessions with your
if any major implementation issues are identified –
by making submissions on your behalf to Treasury of the ASIC, as
appropriate. We can do this on a no-names basis, if this is
1. Explanatory Statement to SLI 2010 No 135.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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