While most AFS Licensees are aware of the requirement to notify ASIC when a Product Disclosure Statement ("PDS") is first given to a client in relation to the issue of a financial product, many AFS Licensees overlook the further requirements to notify ASIC when the contents in a PDS are changed and/or when a financial product in a PDS ceases to be available.
Who is Required to Notify ASIC?
The notification requirements (s 1015D of the Corporations Act 2001 (Cth)) apply to all PDS issuers, being AFS Licensees who issue financial products under a PDS.
Specific requirements apply to managed investment schemes or securities which are included in a sub-fund of a Corporate Collective Investment Vehicle (CCIV) that can be traded on a financial market, managed investment products of an Australian or foreign passport fund. These issuers must lodge a copy of the PDS with ASIC pursuant to section 1015B of the Corporations Act 2001 (Cth).
What are the requirements for notification?
The responsible person (the product issuer) for a PDS must tell ASIC when:
- the PDS is first given to someone in a recommendation, issue or sale situation;
- fees and charges in the PDS are changed; or
- any product in the PDS ceases to be available.
The notification must occur as soon as practicable, or in any event, within five (5) business days of the categories listed above.
If any of the above changes has occurred, the responsible person for a PDS must notify ASIC online via the appropriate form:
- Form FS88 PDS in-use notice;
- Form FS89 Notice of a change to fees and charges in a PDS; or
- Form FS90 Notice that a product in a PDS has ceased to be available.
Other Changes to a PDS
What if a product issuer makes amendments to a PDS which doesn't fall into the categories listed above? This will depend on whether the changes are material.
Regulatory Guide 168 states that a material change to a PDS creates a new PDS and therefore a new PDS in-use notice (Form FS88) is required to be lodged.
Material changes include:
- The correction of misleading or incorrect information;
- The addition of material required (but omitted) from the previous PDS;
- Update, addition to or removal of information in a PDS.
Immaterial changes include:
- Minor formatting changes;
- Fixing typographical errors.
Changes will only be immaterial if the PDS remains clear, concise and effective and is not defective. Where changes are immaterial, no forms are required to be lodged with ASIC.
What else must a product issuer do?
The product issuer must:
- keep a copy of the PDS for seven (7) years after the date of the PDS;
- make a copy of the PDS available to ASIC during that period if ASIC requests it; and
- comply with any reasonable request from any other person for a copy of the PDS during that period.
Your PDS History
AFS Licensees can check all of the current and past PDS lodgements with ASIC via the AFS Licensee Portal by generating a 'PDS Transaction History Report'.
The PDS Transaction History Report shows:
- how many current PDS the AFS Licensee has on record with ASIC;
- document references to these PDSs;
- date that a PDS was put into use;
- date that a PDS was put out of use; and
- any supplementary notice lodged.
We encourage all relevant AFS Licensees to review their PDS Transaction History Report and withdraw any PDSs that are no longer in use.
Regulatory Consequences
Failure to fulfil the notification requirements may attract serious consequences. The failure to lodge PDS notifications is one of the reasons which led to the suspension of an AFS licence.
A PDS must include information about the product's key features, fees, commissions, benefits, risks and the complaints handling procedure.
Further Reading
For further information regarding notification requirements for PDSs, please refer to:
- INFO 94 – Notification requirements for PDS;
- INFO 155 – Shorter PDSs—Complying with requirements for superannuation products, simple managed investment schemes and simple sub-fund products;
- RG 168 – Disclosure Obligations; and
- RG 221 – Digital Financial Services Disclosures.
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.