The Australian Securities and Investments Commission (ASIC) has released an updated guide on product disclosure statements and obligations.

The amended guide reflects the commission’s recent review of disclosure for capital protected products and retail structured or derivative products.

ASIC Commissioner Greg Medcraft says the updated guide “will assist issuers of capital protected products and retail structured or derivative products to make more effective disclosure to prospective investors”.

Among the new recommendations, ASIC advises issuers to “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. 

For capital-protected products, life insurers should ensure disclosure is sufficient so that investors can assess the likelihood of early termination or any other significant limitations of products.

ASIC also advises life insurers to provide better disclosure of break costs that may apply where an investor seeks to terminate or redeem a product before its maturity date.

The update does not otherwise change ASIC’s existing policy on product disclosure statements.