The Australian Securities and Investments Commission's (ASIC) surveillance program of product disclosure statements (PDS) has produced some interesting feedback for providers of financial products. Under the Financial Services Reform Act, a PDS must be provided to all retail clients for all financial services products, excluding shares and debentures.

General problems included the use of undefined or unexplained terms, the use of terms in an unfamiliar way, the product issuer’s ability to participate to a greater or lesser extent on the profits and the ability of the issuer to vary fees at its discretion. As a result of the PDS review results, ASIC has issued 13 interim stop orders.

Ian Johnston, ASIC’s Executive Director of Financial Service Regulation, said that while ASIC is committed to working with the industry during the transition period to ensure the PDS’ meet the new disclosure requirements, the regulator will take appropriate action when the legal requirement are not met.

He said ASIC will continue to monitor the new PDS regime as more complicated products enter the market.

Mr Johnston is currently touring the country as part of the “ASIC Speaks” seminars – One Year On-One To Go – that began in Sydney this week.