ASIC has released updated guidance on product disclosure statements (PDSs) to help issuers of capital protected, retail structured and derivative products to develop more effective disclosure to prospective investors.
The updated regulatory guide, RG168, reflected key findings from ASIC’s recent review of disclosure for these products.
The updated guidance recommended issuers clearly explain counterparty risk, and include supporting financial information to ensure retail investors can assess the issuer’s financial ability to meet its counterparty obligations.
The guidance also advised issuers of capital protected products to ensure disclosure is sufficient so that investors can assess the likelihood of early termination or any other significant limitations of these products.
ASIC also recommended issuers provide better disclosure of break costs that may apply where an investor seeks to terminate or redeem a product before its maturity date.
“The updated guide will assist issuers of capital protected products and retail structured or derivative products to make more effective disclosure to prospective investors,” ASIC commissioner Greg Medcraft said.
The updated RG168 does not otherwise change ASIC’s existing policy on PDS disclosure. It consolidates guidance currently provided by the regulator in various locations and formats and provides a single guide for product issuers and other individuals responsible for PDSs and other disclosure obligations.
