Focus: Funds Management – Facilitating online financial services disclosure
18 April 2008
In brief: The Australian Securities and Investments Commission (ASIC) is proposing exemptions to make it easier to provide some financial services information electronically. Partner Susan Burns and Senior Associate Penelope Barclay explain what is proposed.
How does it affect you?
- ASIC is proposing exemptions that are designed to make it clear that product disclosure statements, financial services guides and other financial services information can be made available by sending emails with hyperlinks or notifying that the information is available on a website.
- The exemptions will not apply to prospectuses.
- Some of the conditions to the proposed relief may cause additional cost or practical difficulties. ASIC is keen to receive submissions on whether this will be the case.
- ASIC is concerned that allowing increased use of hyperlinks may make 'phishing' and other internet scams easier. It has asked for suggestions as to how this risk can be minimised.
- Relief is also proposed for superannuation entities so that website access is the default method for delivering annual superannuation information.
- Comments on the ASIC proposals are due by 28 May 2008
ASIC has issued Consultation Paper 93, Facilitating online financial services disclosure, in which it outlines general relief to facilitate online financial services disclosure required under Parts 7.6 to 7.9 of the Corporations Act 2001 (Cth) for financial services guides (FSGs) and product disclosure statements (PDSs)1.
ASIC considers that the law also permits Parts 7.6 – 7.9 information to be sent as email text, email attachment or fax where the client has nominated an electronic email address or fax number. However, 'there is a view that the current provisions of Parts 7.6 – 7.9 do not permit sending information by sending the client an email containing:
- a hyperlink to the relevant information; or
- a website address and instruction on how to find the relevant information on the website.'
Under the proposed relief, providers will be permitted to supply investors with:
- FSGs, supplementary FSGs, statements of advice, PDSs and supplementary PDSs;
- periodic statements;
- transaction confirmations;
- additional information that they have requested and additional information provided by superannuation fund trustees; and
- unsolicited offers to purchase financial products off-market,
- hyperlink; or
- notifying investors that the information is available on a given website address,
on condition that2:
- consent to electronic delivery has been positive, express and clear;
- the content of the information being provided this way is clearly identified – eg that it is a PDS or FSG etc;
- it is easy for the investor to retrieve, read and print the information and to keep a copy;
- the information is easy to find and will be available for a reasonable period; and
- emails must include a statement that the client can request a paper copy of the information at no cost.
Privacy and document retention requirements will continue to apply to all information provided electronically.
ASIC is also considering related relief to enable superannuation fund trustees to use a website address as the default method of furnishing annual information to members – members will have to actively elect to receive a hard copy of their annual report. ASIC's rationale is that this approach is now permitted under the Corporations Act for annual reports by companies, registered managed investment schemes and disclosing entities.
This relief will be granted subject to the following conditions:
- the trustee must notify each member at least once
- they can elect to receive, free of charge, a copy of the annual superannuation information either as a hard copy or electronically; and
- if they make no election, that the member can access the information on a specified website;
- the member must be able to change their mind about whether they want to receive the information electronically;
- the trustee must provide a hard copy of the annual information to all members who elect to receive the information in this manner and an electronic copy to those who have chosen to receive the information that way;
- a copy of the annual information must be readily accessible on a website; and
- the trustee must notify all members who do not make an
election that they can:
- access a copy of the annual superannuation information on a website; and
- elect to receive a hard or electronic copy of the information, free of charge.
These conditions are intended to reflect the requirements that apply to companies, registered schemes and disclosing entities.
ASIC requires comments on the consultation paper by 28 May 2008.
- Not yet elsewhere in the Corporations Act – for example, Chapter 6D (Prospectuses) but ASIC is keen to understand whether the same need applies to other information.
- ASIC also provides a list of basic principles when using emails and the internet to send information. These are reflected in the conditions that additionally suggested that clients should b allowed to change their mind.
- John BeckinsalePartner,
Ph: +61 7 3334 3520
- Andrew PascoePartner,
Ph: +61 8 9488 3741