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Corporations Amendment Regulations 2010 (No. 5) (135 of 2010)

Schedule 1 Amendments

[17] After Schedule 10BA

insert

Schedule 10C Form and content of Product Disclosure Statement - margin loan

(regulation 7.9.11D)

1 Length and font size for Product Disclosure Statement for margin loan

(1) The length of a Product Disclosure Statement for a margin loan (not including any title page, table of contents or matter in writing that is applied, adopted or incorporated by the Statement) must not exceed:

(a) if it is printed on A4 pages - 4 pages; or

(b) if it is printed on A5 pages - 8 pages; or

(d) otherwise - if it is formatted to be printed on A4 pages, 4 A4 pages.

(2) The minimum font size for text in the Statement is:

(a) for the name, address, ABN (if applicable), ACN (if applicable) and AFSL (if applicable) of the person giving the Statement - 8 points; and

(b) for all other text - 9 points.

Note 1 The Product Disclosure Statement must be worded and presented in a clear, concise and effective manner - see subsection 1013C (3) of the Act.

Note 2 A person required to a give a Product Disclosure Statement to a vision-impaired person must comply with its obligations under the Disability Discrimination Act 1992.

2 Minimum content of Product Disclosure Statement for margin loan

(1) The Product Disclosure Statement must include the following sections, which must be numbered and titled as follows:

1. About [name of provider of the margin loan] and [name of margin loan product]

2. Benefits of [name of margin loan product]

3. How [name of margin loan product] works

4. What is a margin call?

5. The risk of losing money

6. The costs

7. How to apply.

(2) The Product Disclosure Statement must include:

(a) a table of contents that sets out the titles mentioned in subclause (1); and

(b) the telephone number of the provider of the margin loan to enable a borrower for the margin loan to request a copy of the following under regulation 7.9.11G:

(i) a copy of the Statement; and

(ii) a copy of a matter in writing that is applied, adopted or incorporated by the Statement.

(3) The Product Disclosure Statement must:

(a) advise a person reading the Statement that:

(i) it is a summary of significant information and contains a number of references to important information (each of which forms part of the Statement); and

(ii) the person should consider that information before making a decision about the product; and

(iii) the information provided in the Statement is general information only and does not take account of the person’s personal financial situation or needs; and

(iv) the person should obtain financial advice tailored to the person’s personal circumstances; and

(b) display the advice:

(i) at or near the beginning of the document; and

(ii) in a prominent position and style.

(4) The Product Disclosure Statement:

(a) may include additional sections after sections 1 to 7; and

(b) may include other information;

to an extent that does not have the effect of contravening subclause 1 (1).

(5) The Product Disclosure Statement does not need to indicate that a particular requirement is not applicable to the margin loan.

Note The Act, as modified in accordance with Subdivision 4.2A of Division 4 of Part 7.9, requires information to be included in the Product Disclosure Statement only to the extent to which the requirement is applicable to the margin loan.

3 Contents of section 1 (About [name of provider of the margin loan] and [name of margin loan product])

Section 1 of the Product Disclosure Statement must include:

(a) a short description of the margin loan provider and its business; and

(b) a short summary of what margin lending is; and

(c) a statement setting out the possible consequences of borrowing money to invest, including the effect of magnifying both gains and losses; and

(d) a statement that the borrower for a margin loan should regularly monitor the borrower’s portfolio so that:

(i) the borrower can be aware of changes (if any) to the terms of the margin loan; and

(ii) the borrower can take timely action to prevent potential losses in relation to the borrower’s portfolio; and

(e) a statement that the borrower for a margin loan may need, at short notice, to pay an additional amount into the margin loan or sell some of the investments for which the margin loan is made; and

(f) a statement that the provider of a margin loan has the right in certain circumstances to sell all, or part, of the borrower’s portfolio and may not be required under the terms of the margin loan to provide notice to the borrower of its intention to sell; and

(g) a statement that if the value of the portfolio for a margin loan does not cover the cost of repayments for the margin loan:

(i) the borrower for the margin loan may need to access other funds to repay the margin loan; or

(ii) the provider of the margin loan may sell assets provided as security for the margin loan, for example, the borrower’s residential property; and

(h) a statement that the law requires the provider of a margin loan to:

(i) assess whether the margin loan is unsuitable for the potential borrower for the margin loan; and

(ii) if the potential borrower for the margin loan requests a copy of the assessment - to provide a copy of the assessment to the potential borrower for the margin loan.

Note The provider of a margin loan is not required to give the borrower or potential borrower for the margin loan a copy of the assessment if the margin loan is not issued.

4 Contents of section 2 (Benefits of [name of margin loan product])

(1) Section 2 of the Product Disclosure Statement for a margin loan must include a description of the key benefits available to the borrower or potential borrower for the margin loan.

(2) Section 2 of the Statement may include a description about other benefits available to a borrower or potential borrower for the margin loan other than the benefits mentioned in subclause (1).

(3) Section 2 of the Statement may provide for the description mentioned in subclause (2) by applying, adopting or incorporating a matter in writing.

5 Contents of section 3 (How [name of margin loan product] works)

(1) Section 3 of the Product Disclosure Statement for a margin loan must include:

(a) an explanation of how margin lending works including information about the following:

(i) the maximum loan amount for the margin loan;

(ii) the loan-to-value ratios for the margin loan; and

(b) at least 1 example that illustrates the matters mentioned in subparagraphs (a) (i) and (ii); and

(c) a description of the financial products that the borrower or potential borrower for the margin loan can purchase with the margin loan (including the Approved Securities List for the provider or potential provider of the margin loan); and

(d) an explanation of who owns the investments purchased with the margin loan; and

(e) a statement that:

(i) details of the rights and obligations of the borrower for a margin loan are set out in the terms of the agreement for the margin loan; and

(ii) recommends that a potential borrower for a margin loan read the loan agreement; and

(iii) explains how a potential borrower can obtain a copy of the loan agreement; and

(f) an explanation of any other features of the margin loan that:

(i) are not covered by the matters mentioned in paragraphs (a), (c) and (d); and

(ii) are sufficiently important to be material to a reasonable person’s decision to take out the margin loan; and

(g) a reference to:

(i) the calculator provided on a website operated by or on behalf of the Commonwealth and an explanation of the assistance the calculator can provide; or

(ii) if the provider or potential provider of the margin loan provides a calculator to borrowers or potential borrowers for the margin loan - that calculator and an explanation of the assistance the calculator can provide.

(2) Section 3 of the Statement may provide for the following matters by applying, adopting or incorporating the matter in writing:

(a) the Approved Securities List;

(b) the explanation mentioned in paragraph (1) (f).

6 Contents of section 4 (What is a margin call?)

Section 4 of the Product Disclosure Statement for a margin loan must include:

(a) if the terms of the margin loan include a margin call:

(i) an explanation of what a margin call is; and

(ii) an explanation of when there will be a margin call in response to changes in the market; and

(iii) an explanation of when there will be a margin call at the discretion of the provider of the margin loan; and

(iv) at least 1 example of how a margin call works, including:

(A) the impact of breaching the loan-to-value ratio ( LVR ) for the margin loan; and

(B) how to adjust the LVR back to the required level for the margin loan; and

(v) a description of how a margin call can be dealt with by the borrower for the margin loan; and

(vi) a statement that if there is a margin call, the provider of the margin loan will notify the borrower for the margin loan, or the borrower’s financial advisor, that the margin call has occurred; and

(vii) a statement that the borrower for the margin loan must be contactable at all times in case of a margin call; and

(b) if the terms of the margin loan do not include a margin call, a statement to that effect.

7 Contents of section 5 (The risk of losing money)

(1) Section 5 of the Product Disclosure Statement for a margin loan must include a description of the risks associated with margin lending to a borrower for the margin loan, including a description of any of the following risks, if relevant:

(a) the risk that the value of the borrower’s investment may fall and the possible consequences to the borrower if this occurs, in particular the risk of a margin call occurring;

(b) the risk that the provider of the margin loan may change the loan-to-value ratio of an investment at any time and the consequences to the borrower of the change, in particular, the risk of a margin call occurring;

(c) the risk that the provider of the margin loan may remove an investment from the Approved Securities List and the consequences for the borrower if this occurs, in particular, the risk of a margin call occurring;

(d) the risk that the interest rate for the margin loan may rise and the consequences for the borrower if this occurs, in particular, the possibility that interest payments owed by the borrower may exceed the returns available from the borrower’s portfolio;

(e) the risk of the loss of property of the borrower if the property has been mortgaged as security for, or in connection with, the margin loan;

(f) the risk of a default event under the loan agreement occurring and the potential consequences for the borrower if a default event does occur;

(g) the risk that the taxation laws may change and that this may have a negative effect on the tax position for the borrower for the margin loan;

(h) any other significant risks that a reasonable person would consider to be relevantly associated with the margin loan.

(2) Section 5 of the Statement must include a hyperlink to the page on a website operated by or on behalf of the Commonwealth that provides information about margin loans.

(3) Section 5 of the Statement may include information about risks associated with margin lending other than the risks mentioned in subclause (1).

(4) Section 5 of the Statement may provide for the information mentioned in subclause (3) by applying, adopting or incorporating a matter in writing.

8 Contents of section 6 (The costs)

(1) Section 6 of the Product Disclosure Statement for a margin loan must include the following:

(a) a description of the interest rate for the margin loan, including how the interest rate is calculated;

(b) a statement about whether a default interest rate will be charged for the margin loan;

(d) a statement about whether a fee or cost to be charged by the provider for the loan can be unilaterally changed by the provider under the loan agreement;

(e) a list of matters for which the provider of the margin loan will charge a minor fee for the margin loan;

(f) a statement about whether a commission or fee is payable to a financial advisor or other third party for the margin loan and, if a commission or fee is payable:

(i) the circumstances in which the commission or fee will be payable; and

(ii) how the borrower for the margin loan can obtain more detailed information about the commission or fee.

(2) Section 6 of the Statement must include:

(a) a statement of the interest rate for the margin loan; and

(b) details of any minor fee the provider of the margin loan will charge for the margin loan.

(3) Section 6 of the Statement may provide for the statement mentioned in paragraph (2) (a) or the details mentioned in paragraph (2) (b) by applying, adopting or incorporating a matter in writing

9 Contents of section 7 (How to apply)

(1) Section 7 of the Product Disclosure Statement for a margin loan must include:

(a) information about how to apply for the margin loan; and

(b) a short summary about the dispute resolution system the provider of the margin loan has for dealing with disputes or complaints about the loan, including:

(i) how a borrower for the loan may make a complaint about the loan; and

(ii) contact details for making a complaint about the loan.

(2) The margin loan provider:

(a) may provide more detailed information about cooling-off periods, complaints and dispute resolution; and

(b) may provide that information by applying, adopting or incorporating a matter in writing.

Schedule 10D Form and content of Product Disclosure Statement - superannuation product to which Subdivision 4.2B of Division 4 of Part 7.9 applies

(regulation 7.9.11O)

1 Length and font size for Product Disclosure Statement for superannuation product

(1) The length of a Product Disclosure Statement for a superannuation product to which Subdivision 4.2B of Division 4 of Part 7.9 applies (not including any matter in writing that is applied, adopted or incorporated by the Statement) must not exceed:

(a) if it is printed on A4 pages - 8 pages; or

(b) if it is printed on A5 pages - 16 pages; or

(d) otherwise - if it is formatted to be printed on A4 pages, 8 A4 pages.

(2) The minimum font size for text in the Statement is:

(a) for the name, address, ABN (if applicable), ACN (if applicable) and AFSL (if applicable) of the person giving the Statement - 8 points; and

(b) for all other text - 9 points.

Note 1 The Product Disclosure Statement must be worded and presented in a clear, concise and effective manner - see subsection 1013C (3) of the Act.

Note 2 A person required to a give a Product Disclosure Statement to a vision-impaired person must comply with its obligations under the Disability Discrimination Act 1992.

2 Minimum content of Product Disclosure Statement for superannuation product

(1) Subject to subclause 10 (1), the Product Disclosure Statement must include sections which must be numbered and titled as follows:

1. About [name of superannuation product]

2. How super works

3. Benefits of investing with [name of superannuation product]

4. Risks of super

5. How we invest your money

6. Fees and costs

7. How super is taxed

8. Insurance in your super

9. How to open an account.

(2) However, if the superannuation product does not offer insurance cover:

(a) section 9 may be presented as section 8; and

(b) if section 9 is presented as section 8 - a reference in clause 11 to section 9 is taken to be a reference to section 8.

(3) The Product Disclosure Statement must include:

(a) a table of contents that sets out the titles mentioned in subclause (1); and

(b) the telephone number of the superannuation trustee to enable a person who acquires the superannuation product to request a copy of the following under regulation 7.9.11R:

(i) a copy of the Statement; and

(ii) a copy of a matter in writing that is applied, adopted or incorporated by the Statement.

(4) The Product Disclosure Statement must:

(a) advise a person reading the Statement that:

(i) it is a summary of significant information and contains a number of references to important information (each of which forms part of the Statement); and

(ii) the person should consider that information before making a decision about the product; and

(iii) the information provided in the Statement is general information only and does not take account of the person’s personal financial situation or needs; and

(iv) the person should obtain financial advice tailored to the person’s personal circumstances; and

(b) display the advice:

(i) at or near the beginning of the document; and

(ii) in a prominent position and style.

(5) The Product Disclosure Statement:

(a) may include additional sections after sections 1 to 9; and

(b) may include other information;

to an extent that does not have the effect of contravening subclause 1 (1).

(6) The Product Disclosure Statement does not need to indicate that a particular requirement is not applicable to the superannuation product.

Note The Act, as modified in accordance with Subdivision 4.2B of Division 4 of Part 7.9, requires information to be included in the Product Disclosure Statement only to the extent to which the requirement is applicable to the superannuation product.

3 Contents of section 1 (About [name of superannuation product])

Section 1 of the Product Disclosure Statement must describe, in the form of a summary, the superannuation fund and its products.

4 Contents of section 2 (How super works)

(1) Section 2 of the Product Disclosure Statement must include statements to the effect that:

(a) superannuation is a means of saving for retirement which is, in part, compulsory; and

(b) there are different types of contributions available to a person (for example, employer contributions, voluntary contributions, government co-contributions); and

(d) tax savings are provided by the Government; and

(e) most people have the right to choose into which fund the employer should direct their superannuation guarantee contributions.

(2) The superannuation trustee may provide more detailed information on the matters set out in subclause (1) by:

(a) applying, adopting or incorporating a matter in writing; or

(b) providing a reference to a website, operated by or on behalf of the Commonwealth, that contains the information.

5 Contents of section 3 (Benefits of investing with [name of superannuation product])

(1) Section 3 of the Product Disclosure Statement must describe the superannuation product covered by the Statement, including a summary of its significant features and the benefits it provides.

(2) The superannuation trustee may provide additional information about significant benefits of superannuation or other significant features of the superannuation product by applying, adopting or incorporating a matter in writing.

6 Contents of section 4 (Risks of super)

(1) Section 4 of the Product Disclosure Statement must include statements to the following effect:

(a) all investments carry risk;

(b) different strategies may carry different levels of risk, depending on the assets that make up the strategy;

(2) Section 4 must describe, in the form of a summary, the significant risks of the particular superannuation product.

(3) Section 4 must describe the significant risks of superannuation (to the extent only that the description required by subitem (2) has not already described the risk) by including statements to the following effect:

(a) the value of investments will vary;

(b) the level of returns will vary, and future returns may differ from past returns;

(d) superannuation laws may change in the future;

(e) the amount of a person’s future superannuation savings (including contributions and returns) may not be enough to provide adequately for the person’s retirement;

(f) the level of risk for each person will vary depending on a range of factors, including:

(i) age; and

(ii) investment time frames; and

(iii) where other parts of the person’s wealth are invested; and

(iv) the person’s risk tolerance.

(4) The superannuation trustee may provide additional information about significant risks of superannuation by applying, adopting or incorporating a matter in writing.

7 Contents of section 5 (How we invest your money)

(1) Section 5 of the Product Disclosure Statement must describe, in the form of a summary:

(a) the investment options being offered; and

(b) what happens if the person does not make a choice of where to invest.

(2) Section 5 must state, in the form of a warning, that the person must consider:

(a) the likely investment return; and

(b) the risk; and

when choosing an option in which to invest.

(3) For at least 1 investment option, section 5 must:

(a) state the name of the option and give a short description of it, including the type of investors for whom it is intended to be suitable; and

(b) list the asset classes in which the option invests, and set out, in the form of a range or otherwise, the strategic asset allocation of the asset classes; and

(d) state the minimum suggested time frame for holding the investment; and

(e) describe, in the form of a summary, the risk level of the option.

(4) If the superannuation product has a default option, section 5 must give the information mentioned in subclause (3) for the default option, whether or not section 5 gives that information for any other investment option.

(5) If the superannuation product offers more than 1 default investment option, section 5 must give the information mentioned in subclause (3) for the default investment option under which the superannuation trustee has the most funds invested, whether or not section 5 gives that information for any other investment option

(6) If the superannuation product does not have a default option, and has a balanced investment option (within the meaning given by item 101 of Schedule 10), section 5 must give the information mentioned in subclause (3) for the balanced investment option, whether or not section 5 gives that information for any other investment option.

(7) If the superannuation product does not have a default option, and does not have a balanced investment option, section 5 must give the information mentioned in subclause (3) for the investment option under which the superannuation trustee has the most funds invested, whether or not section 5 gives that information for any other investment option.

(8) Section 5:

(a) must make provision for each investment option which is not presented in section 5 in accordance with subclause (3), (4), (5), (6) or (7); and

(b) may make provision for the option by applying, adopting or incorporating matter in a document that:

(i) includes the information mentioned in subclause (3); and

(ii) presents it in the way mentioned in the subclause.

(9) The superannuation trustee:

(a) must provide information about how a person may switch the person’s investments; and

(b) must provide information about:

(i) whether the superannuation product’s investment options may be changed; and

(ii) and, if so, how the options may be changed; and

(c) must describe, in the form of a summary, the extent to which labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realisation of investments relating to the superannuation product; and

(d) may provide the information in paragraphs (a) to (c), and any additional information about investment options, by applying, adopting or incorporating a matter in writing.

8 Contents of section 6 (Fees and costs)

(1) For each investment option of the superannuation product that is presented in section 5 in detail in accordance with subclause 7 (3), section 6 of the Product Disclosure Statement must state:

(a) the cost of acquiring the option; and

(b) the fees and costs that are charged in relation to the option.

Note The statement will be made using the template set out in subclause (3).

(2) Before setting out any other substantive material, section 6 must:

(a) set out the Consumer Advisory Warning in clause 221 of Schedule 10; and

(b) give a concise example in the form set out in the Consumer Advisory Warning in clause 221 of Schedule 10.

(3) Section 6 must set out the fees and costs for each investment option that is presented in section 5 in detail in accordance with subclause 7 (3), using the following template.

TYPE OF FEE OR COST	AMOUNT
Fees when your money moves in or out of the fund
Establishment fee
Contribution fee
Withdrawal fee
Termination fee
Management costs
The fees and costs for managing your investment

[If there are other service fees, such as advisor service fees or special request fees, include a cross reference to the document that contains the information mentioned in paragraph (10) (a).].

(4) The template is to be completed in accordance with Division 3 of Schedule 10 (including definitions applicable to that Division), except that:

(a) clauses 203, 205, 206 and 207 and subclause 208 (2) do not apply; and

(b) the reference in clause 204 to clause 205 and clause 206 does not apply; and

“(for example, by using an asterisk with a footnote stating ‘The amount of this fee can be negotiated’)”.

(5) Section 6 must set out the information about fee changes set out in paragraph 209 (k) of Schedule 10.

(6) Section 6 must:

(a) state that the information in the template can be used to compare costs between different superannuation products; and

(b) state concisely, and in general terms, that fees and costs can be paid directly from the person’s account or deducted from investment returns.

(7) Section 6 must give a worked example as follows:

(a) if the superannuation product offers more than 1 default investment option, section 6 must give a worked example for the default investment option under which the superannuation trustee has the most funds invested;

(b) if the superannuation product does not have a default option, and has a balanced investment option (within the meaning given by item 101 of Schedule 10), section 6 must give a worked example for the balanced investment option;

(c) if the superannuation product does not have a default option, and does not have a balanced investment option, section 6 must give a worked example for the investment option under which the superannuation trustee has the most funds invested;

in accordance with Divisions 5 and 6 of Schedule 10 (including definitions applicable to those Divisions), except that clauses 212 and 220 do not apply.

(8) Section 6:

(a) must refer to the calculator provided by ASIC on its FIDO website or a similar website operated by or on behalf of ASIC; and

(b) may also refer to the calculator (if any) provided by the superannuation trustee on its website; and

(c) must state that each calculator referred to can be used to calculate the effect of fees and costs on account balances.

(9) If additional fees may be payable to a financial advisor, section 6 must:

(a) state, in the form of a warning, that additional fees may be paid to a financial advisor if a financial advisor is consulted; and

(b) refer to the Statement of Advice in which details of the fees are set out; and

(i) state that fees may be paid to the employer entity’s financial adviser; and

(ii) explain how the fees are determined.

(10) The superannuation trustee:

(a) must provide the fees and costs of each of the investment options in accordance with Schedule 10, and may do so by applying, adopting or incorporating a matter in writing; and

(b) may provide more detailed information about fees and costs by applying, adopting or incorporating a matter in writing.

9 Contents of section 7 (How super is taxed)

(1) Section 7 of the Product Disclosure Statement must describe, in the form of a summary, the significant tax information relating to superannuation products, including:

(a) how tax amounts due are paid; and

(b) the main taxes that are payable in relation to contributions (if contributions are permitted), fund earnings and withdrawals.

(2) Section 7 must:

(a) state, in the form of a warning, that the person should provide the person’s tax file number as part of acquiring the superannuation product; and

(b) explain, in the form of a summary, the consequences if the person does not provide the person’s tax file number; and

(c) if contributions are permitted - set out a warning that there will be taxation consequences if the contribution caps applicable to superannuation are exceeded.

(3) The superannuation trustee may provide additional information about taxation matters relating to superannuation products by applying, adopting or incorporating a matter in writing.

10 Contents of section 8 (Insurance in your super)

(1) If the superannuation product does not offer insurance cover, the Product Disclosure Statement is not required to include any of the information in this clause.

(2) If the superannuation product offers insurance cover, section 8 must:

(a) describe, in the form of a summary, the main types of insurance cover that a person can acquire; and

(b) describe, in the form of a summary, how to apply for insurance cover; and

(d) describe, in the form of a summary, who is responsible for paying the insurance costs and how they are calculated.

(3) If the superannuation product offers insurance cover by default, section 8 must:

(a) describe, in the form of a summary, the level and type of cover; and

(b) state:

(i) the actual cost of the cover in dollars, or the range of costs that would be payable depending on a person’s circumstances; and

(ii) who is responsible for paying the costs; and

(i) decline to acquire the cover; or

(ii) cancel the cover; and

(d) state how a person can decline to acquire the cover or cancel the cover; and

(e) state whether a person can change the person’s insurance cover; and

(f) state how a person can change the person’s insurance cover; and

(g) state, in the form of a warning, that, unless a person declines to acquire the default insurance cover or cancels it, the cost of the cover will be deducted from the person’s account or from the person’s contributions (as applicable); and

(h) include information about eligibility for, and the cancellation of, the insurance cover; and

(i) include information about any conditions and exclusions that are applicable to the insurance cover.

(4) If the superannuation product does not offer insurance cover by default but offers insurance cover as an option, section 8 must include the following information:

(a) the level and type of insurance cover available;

(b) the actual cost of the cover in dollars, or the range of costs that would be payable depending on a person’s circumstances;

(d) any conditions and exclusions that are applicable to the insurance cover;

(e) any other significant matter in relation to insurance cover.

Examples for paragraph (e)

1 Information about how a person can apply for the insurance cover.

2 Information about how a person can subsequently change or cancel the insurance cover.

(5) The superannuation trustee:

(a) may provide the information in paragraphs (3) (h) and (i) and subclause (4); and

(b) may provide additional information about insurance cover;

by applying, adopting or incorporating a matter in writing.

(6) If information about:

(a) eligibility for, or the cancellation of, the insurance cover; or

(b) any conditions and exclusions that are applicable to the insurance cover;

is provided for in accordance with subclause (5), section 8 must include a warning to the effect that the matter may affect a person’s entitlement to insurance cover and that the information should be read before deciding whether the insurance is appropriate.

(7) If information about:

(a) the level and type of optional insurance cover available; or

(b) the actual cost of the optional insurance cover in dollars, or the range of costs that would be payable depending on a person’s circumstances; or

is provided for in accordance with subclause (5), section 8 must include a warning to the effect that the information should be read before deciding whether the insurance is appropriate.

11 Contents of section 9 (How to open an account)

(1) Section 9 of the Product Disclosure Statement must, if applicable:

(a) describe, in the form of a summary, how to open an account with the superannuation provider; and

(b) explain the cooling-off period that applies to the superannuation product; and

Note The effect of subclause 10 (1) is that the Product Disclosure Statement is not required to include section 8 (as set out in clause 10) if the superannuation product does not offer insurance cover. In that case, subclause 2 (2) allows the Statement to present the information in this clause as “section 8” or “section 9”.

(2) The superannuation trustee:

(a) may provide more detailed information about cooling-off periods, complaints and dispute resolution; and

(b) may provide that information by applying, adopting or incorporating a matter in writing.

Schedule 10E Form and content of Product Disclosure Statement - simple managed investment scheme

(regulation 7.9.11W)

1 Length and font size for Product Disclosure Statement for simple managed investment scheme

(1) The length of a Product Disclosure Statement for a simple managed investment scheme to which Subdivision 4.2C of Division 4 of Part 7.9 applies (not including any matter in writing that is applied, adopted or incorporated by the Statement) must not exceed:

(a) if it is printed on A4 pages - 8 pages; or

(b) if it is printed on A5 pages - 16 pages; or

(d) otherwise - if it is formatted to be printed on A4 pages, 8 A4 pages.

(2) The minimum font size for text in the Statement is:

(a) for the name, address, ABN (if applicable), ACN (if applicable), ARSN and AFSL (if applicable) of the person giving the Statement - 8 points; and

(b) for all other text - 9 points.

Note 1 The Product Disclosure Statement must be worded and presented in a clear, concise and effective manner - see subsection 1013C (3) of the Act.

Note 2 A person required to a give a Product Disclosure Statement to a vision-impaired person must comply with its obligations under the Disability Discrimination Act 1992.

2 Minimum content of Product Disclosure Statement for simple managed investment scheme

(1) The Product Disclosure Statement must include sections which must be numbered and titled as follows:

1. About [name of responsible entity]

2. How [name of simple managed investment scheme] works

3. Benefits of investing in [name of simple managed investment scheme]

4. Risks of managed investment schemes

5. How we invest your money

6. Fees and costs

7. How managed investment schemes are taxed

8. How to apply.

(2) The Statement must include:

(a) a table of contents that sets out the titles mentioned in subclause (1); and

(b) the telephone number of the responsible entity for the simple managed investment scheme to enable a person who invests in the simple managed investment scheme to request a copy of the following under regulation 7.9.11Z:

(i) a copy of the Statement; and

(ii) a copy of a matter in writing that is applied, adopted or incorporated by the Statement.

(3) The Statement must:

(a) advise a person reading the Statement that:

(i) it is a summary of significant information and contains a number of references to important information (each of which forms part of the Statement); and

(ii) persons should consider that information before making a decision about the simple managed investment scheme; and

(iii) the information provided in the Statement is general information only and does not take account of the person’s personal financial situation or needs; and

(iv) the person should obtain financial advice tailored to the person’s personal circumstances; and

(b) display the advice:

(i) at or near the beginning of the document; and

(ii) in a prominent position and style.

(4) The Statement:

(a) may include additional sections after sections 1 to 8; and

(b) may include other information;

to an extent that does not have the effect of contravening subclause 1 (1).

(5) The Product Disclosure Statement does not need to indicate that a particular requirement is not applicable to the simple managed investment scheme.

Note The Act, as modified in accordance with Subdivision 4.2C of Division 4 of Part 7.9, requires information to be included in the Product Disclosure Statement only to the extent to which the requirement is applicable to the simple managed investment scheme.

3 Contents of section 1 (About [name of responsible entity])

(1) Section 1 of the Product Disclosure Statement must describe, in the form of a summary:

(a) the responsible entity and its role in operating the simple managed investment scheme; and

(b) the investment manager, if the investment manager is different from the responsible entity.

(2) If there is more than 1 investment manager, the Statement may describe a particular manager by applying, adopting or incorporating a matter in writing.

4 Contents of section 2 (How [name of simple managed investment scheme] works)

(1) Section 2 of the Product Disclosure Statement must describe, in the form of a summary:

(a) how the simple managed investment works; and

(b) the interests that members acquire.

(2) Section 2 must:

(a) if applicable - describe, in the form of a summary, the minimum investment amounts; and

(b) provide information about the structure of the simple managed investment scheme; and

(c) state, in general terms, that the price of interests will vary as the market value of assets in the simple managed investment scheme rises or falls; and

(d) describe, in the form of a summary, how members can increase or decrease their investment by acquiring interests or disposing of interests; and

(e) state, in general terms, that in some circumstances, such as when there is a freeze on withdrawals, members may not be able to withdraw their funds within the usual period upon request; and

(f) describe the frequency of distributions and explain how distributions are calculated.

(3) The responsible entity:

(a) may provide more detailed information on the acquisition and disposal of interests; and

(b) may provide the information by applying, adopting or incorporating a matter in writing.

5 Contents of section 3 (Benefits of investing in [name of simple managed investment scheme])

(1) Section 3 of the Product Disclosure Statement must, before setting out any other information, describe, in the form of a summary:

(a) the significant features of the simple managed investment scheme; and

(b) the significant benefits of the simple managed investment scheme.

(2) The responsible entity may provide additional information about:

(a) other features and benefits of the simple managed investment scheme; or

(b) other features and benefits of simple managed investment schemes;

by applying, adopting or incorporating a matter in writing.

6 Contents of section 4 (Risks of managed investment schemes)

(1) Section 4 of the Product Disclosure Statement must include statements to the following effect:

(a) all investments carry risk;

(b) different strategies may carry different levels of risk, depending on the assets that make up the strategy;

(2) Section 4 must describe, in the form of a summary, the significant risks of the particular simple managed investment scheme.

(3) Section 4 must describe the significant risks of managed investment schemes (to the extent only that the description required by subitem (2) has not already described the risk) by including statements to the following effect:

(a) the value of investments will vary;

(b) the level of returns will vary, and future returns may differ from past returns;

(d) laws affecting registered managed investment schemes may change in the future;

(e) the level of risk for each person will vary depending on a range of factors, including:

(i) age; and

(ii) investment time frames; and

(iii) where other parts of the member’s wealth are invested; and

(iv) the member’s risk tolerance.

(4) The responsible entity may provide additional information about significant risks of managed investment schemes by applying, adopting or incorporating a matter in writing.

7 Contents of section 5 (How we invest your money)

(1) Section 5 of the Product Disclosure Statement must describe, in the form of a summary, the investment options offered by the simple managed investment scheme.

(2) Section 5 must state, in the form of a warning, that the person should consider:

(a) the likely investment return; and

(b) the risk; and

when choosing an option in which to invest.

(3) For at least 1 investment option, section 5 must:

(a) state the name of the option and give a short description of it, including the type of investors for whom it is intended to be suitable; and

(b) list the asset classes in which the option invests, and set out, in the form of a range or otherwise, the strategic asset allocation of the asset classes; and

(d) state the minimum suggested time frame for holding the investment; and

(e) describe, in the form of a summary, the risk level of the option.

(4) If the simple managed investment scheme has a balanced investment option (within the meaning given by item 101 of Schedule 10), section 5 must give the information mentioned in subclause (3) for the balanced investment option, whether or not section 5 gives that information for any other investment option.

(5) If the simple managed investment scheme does not have a balanced investment option, section 5 must give the information mentioned in subclause (3) for the investment option under which the entity has the most funds invested, whether or not section 5 gives that information for any other investment option.

(6) Section 5:

(a) must make provision for each investment option which is not presented in section 5 in accordance with subclause (3), (4) or (5); and

(b) may make provision for the option by applying, adopting or incorporating matter in a document that:

(i) includes the information mentioned in subclause (3); and

(ii) presents it in the way mentioned in the subclause.

(7) The responsible entity:

(a) must provide information about how a member may switch the member’s investments; and

(b) must provide information about:

(i) whether the simple managed investment scheme’s investment options may be changed; and

(ii) if so, how the options may be changed; and

(d) may provide the information in paragraphs (a) to (c), and any additional information about investment options, by applying, adopting or incorporating a matter in writing.

8 Contents of section 6 (Fees and costs)

(1) For each investment option of the simple managed investment scheme that is presented in section 5 in detail in accordance with subclause 7 (3), section 6 of the Product Disclosure Statement must state:

(a) the cost of acquiring the option; and

(b) the fees and costs that are charged in relation to the option.

Note The statement will be made using the template set out in subclause (3).

(2) Before setting out any other substantive material, section 6 must:

(a) set out the Consumer Advisory Warning in clause 221 of Schedule 10; and

(b) give a concise example in the form set out in the Consumer Advisory Warning in clause 221 of Schedule 10.

(3) Section 6 must set out the fees and costs for each investment option that is presented in section 5 in detail in accordance with subclause 7 (3), using the following template:

TYPE OF FEE OR COST	AMOUNT
Fees when your money moves in or out of the fund
Establishment fee
Contribution fee
Withdrawal fee
Termination fee
Management costs
The fees and costs for managing your investment

[If there are other service fees, such as advisor service fees or special request fees, include a cross reference to the document that contains the information mentioned in paragraph (10) (a).XT FS='12' TS='87879' TE='87880'>.

(4) The template is to be completed in accordance with Division 3 of Schedule 10 (including definitions applicable to that Division), except that:

(a) clauses 203, 205, 206 and 207 and subclause 208 (2) do not apply; and

(b) the reference in clause 204 to clause 205 and clause 206 does not apply; and

“(for example, by using an asterisk with a footnote stating ‘The amount of this fee can be negotiated’)”.

(5) Section 6 must set out the information about fee changes set out in paragraph 209 (k) of Schedule 10.

(6) Section 6 must:

(a) state that the information in the template can be used to compare costs between different simple managed investment schemes; and

(b) state concisely, and in general terms, that fees and costs can be paid directly from the person’s account or deducted from investment returns.

(7) Section 6 must give a worked example as follows:

(a) if the simple managed investment scheme does not have a balanced investment option (within the meaning given by item 101 of Schedule 10), section 6 must give a worked example for the default investment option;

(b) if the simple managed investment scheme does not have a default option, and does not have a balanced investment option, section 6 must give a worked example for the investment option under which the entity has the most funds invested;

in accordance with Divisions 5 and 6 of Schedule 10 (including definitions applicable to those Divisions), except that clauses 211 and 220 do not apply.

(8) Section 6:

(a) must refer to the calculator provided by ASIC on its FIDO website or a similar website operated by or on behalf of ASIC; and

(b) may also refer to the calculator (if any) provided by the responsible entity on its website; and

(c) must state that each calculator referred to can be used to calculate the effect of fees and costs on account balances.

(9) If additional fees may be payable to a financial advisor, section 6 must:

(a) state, in the form of a warning, that additional fees may be paid to a financial advisor if a financial advisor is consulted; and

(b) refer to the Statement of Advice in which details of the fees are set out.

(10) The responsible entity:

(a) must provide the fees and costs of each of the investment options in accordance with Schedule 10, and may do so by applying, adopting or incorporating a matter in writing; and

(b) may provide more detailed information about fees and costs by applying, adopting or incorporating a matter in writing.

9 Contents of section 7 (How managed investment schemes are taxed)

(1) Section 7 of the Product Disclosure Statement must state, in the form of a warning, that:

(a) investing in a registered managed investment scheme is likely to have tax consequences; and

(b) persons are strongly advised to seek professional tax advice.

(2) Section 7 must also include statements to the following effect:

(a) registered managed investment schemes do not pay tax on behalf of members;

(b) members are assessed for tax on any income and capital gains generated by the registered managed investment scheme.

(3) The responsible entity may provide additional information about taxation matters relating to registered managed investment schemes by applying, adopting or incorporating a matter in writing.

10 Contents of section 8 (How to apply)

(1) Section 8 of the Product Disclosure Statement must:

(a) describe, in the form of a summary, how to invest in the simple managed investment scheme; and

(b) explain the cooling-off period that applies to the simple managed investment scheme; and

(2) The responsible entity:

(a) may provide more detailed information about cooling-off periods, complaints and dispute resolution; and

(b) may provide that information by applying, adopting or incorporating a matter in writing.

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