EXPLANATORY STATEMENT for
ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056, under paragraph 1020F(1)(c) of the Corporations Act 2001 (the Corporations Act).
Paragraph 1020F(1)(c) provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied.
The instrument remakes ASIC Class Order [CO 03/1092] Further relief for joint Product Disclosure Statements which is due to sunset on 1 April 2017 under the Legislation Act 2003.
ASIC Class Order [CO 03/1092] is repealed by ASIC Corporations (Repeal) Instrument 2016/1053.
- Background
This instrument grants relief from the requirements in section 1013A of the Corporations Act, to allow financial product issuers to jointly prepare a single Product Disclosure Statement (PDS) in certain circumstances.
The instrument enables product issuers that together offer two or more complementary products to issue a joint PDS so that retail clients can consider those products together as part of one overall purchasing decision.
2. Purpose of the instrument
The purpose of the ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056 is to continue the substantive effect of the relief granted by ASIC Class Order [CO 03/1092] Further relief for joint Product Disclosure Statements.
ASIC Class Order [CO 03/1092] was intended to provide certainty and flexibility for issuers of financial products working together by permitting them to prepare joint PDSs, while maintaining consumer safeguards already in place under the Corporations Act.
3. Operation of the instrument
Declaration to modify section 1013A of the Corporations Act and omit regulation 7.9.07J of the Corporations Regulations 2001
Section 5 modifies section 1013A of the Corporations Act and omits regulation 7.9.07J of the Corporations Regulations to permit joint issuers of Product Disclosure Statements, in certain circumstances.
Section 6 sets out the circumstances in which the modifications and omission apply, including that the PDS clearly states it covers two or more financial products, and that each issuer takes full responsibility for the whole of the PDS.
4. Consultation
ASIC consulted with industry stakeholders on its proposal to remake, without significant changes, ASIC Class Order [CO 03/1092].
The feedback received in response to ASIC Consultation Paper CP 255 Remaking ASIC class orders on financial services disclosure requirements supported the proposal to issue a new instrument to continue the effect of the relief granted under ASIC Class Order [CO 03/1092].
Overview
The ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056 was introduced to amend the Corporations Act 2001 and continue the relief granted by ASIC Class Order [CO 03/1092]. This instrument, prepared by the Australian Securities and Investments Commission (ASIC), aims to provide certainty and flexibility for financial product issuers by allowing them to jointly prepare a single Product Disclosure Statement (PDS) when offering complementary products. The policy objective is to maintain consumer safeguards while enabling product issuers to issue joint PDSs, facilitating a comprehensive review of products by retail clients. The instrument, which replaces the expiring ASIC Class Order [CO 03/1092], was enacted to maintain the substantive effect of the relief and follows consultations with industry stakeholders that supported the continuation of these disclosure requirements.
Scope and Application
The ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056 applies to financial product issuers within the Commonwealth of Australia, granting them relief from certain requirements of the Corporations Act 2001. Specifically, it allows financial product issuers to jointly prepare a single Product Disclosure Statement (PDS) when offering two or more complementary products. This relief is intended to provide flexibility and certainty to issuers, enabling them to present their products in a manner that facilitates an overall purchasing decision for retail clients. The instrument operates by modifying section 1013A of the Corporations Act and omitting regulation 7.9.07J of the Corporations Regulations 2001, with the condition that the joint PDS clearly states it covers multiple financial products and that each issuer takes full responsibility for the entire PDS. This instrument does not apply to entities or individuals not involved in the issuance of financial products, and it extends only to the Commonwealth jurisdiction. The relief granted by this instrument continues the effect of ASIC Class Order [CO 03/1092], which was set to expire, and it was made following consultation with industry stakeholders.
Key Provisions
The ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056, under the Corporations Act 2001, modifies the requirements for issuers of financial products to allow them to jointly prepare a single Product Disclosure Statement (PDS) when offering complementary products (Section 5). This relief is contingent upon specific conditions, including that the PDS clearly indicates it pertains to two or more financial products and that each issuer assumes full responsibility for the entire PDS (Section 6).
The obligations imposed by this instrument mandate that issuers who choose to jointly prepare a PDS must ensure that the statement is comprehensive and transparent, clearly disclosing all relevant information about the financial products being offered. Each issuer must take full responsibility for the content of the joint PDS, ensuring that it meets all statutory requirements and consumer protection standards. The joint PDS must be prepared in a manner that allows retail clients to understand and compare the products being offered, facilitating an informed decision-making process.
Failure to comply with the requirements set out in this instrument may lead to regulatory consequences. Breaches of the obligations could result in enforcement actions by ASIC, including the imposition of fines or other penalties as deemed appropriate by the courts. The potential penalties for non-compliance are significant, reflecting the importance of accurate and transparent disclosure to protect consumers. While the exact maximum penalties are not specified in the instrument itself, they would typically be in line with the general provisions of the Corporations Act, which can include substantial fines for both individuals and corporations. Additionally, persistent or severe breaches may lead to more severe consequences, such as disqualification from managing corporations or involvement in financial services.