Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, and the Hon Lindsay Tanner MP, Minister for Finance and Deregulation, today welcomed new reforms to enable short, readable four-page Product Disclosure Statements (PDSs) in anticipation of the commencement of First Home Saver Accounts.
Minister Sherry said: "The Rudd Government committed to simplifying disclosure documents as a priority, and now we're delivering on that commitment whilst better informing consumers and cutting red tape."
"Currently, many complex and lengthy disclosure documents are often between 50 and 100 pages long and are as readable as Latin to the majority of Australians. This is unacceptable."
"Today's new disclosure statement passes my 'Burnie Pub test' as it's clear, simple and will improve Australians' access to cost effective financial advice."
The new disclosure documents will make it much easier for people who are interested in using First Home Saver Accounts to understand and compare the products on offer. Key product information is provided over the equivalent of four A4 pages in concise, plain English and can be read and understood in just a few minutes.
Minister Tanner said: "The First Home Saver PDS reforms and the PDS examples show that product disclosure doesn't have to be long, complex and unreadable. These PDS examples are refreshingly short, clear and to the point."
"They're the first instalment of work from the Financial Services Working Group (FSWG) which the Rudd Government established shortly after coming to office."
"Shorter, clearer disclosure statements will benefit consumers and industry by both improving investor protection and reducing red tape. This is another excellent example of the Rudd Government's deregulation agenda delivering results."
A consultancy designed and consumer tested the PDS examples (see below) in close consultation with the FSWG and its Advisory Panel, consisting of key industry and consumer representatives.
"Some said four pages couldn't be done - but the Financial Services Working Group has delivered an outstanding document and demonstrated that it is possible to have short, simple disclosure that covers the important things that consumers need to know before investing in a financial product," Minister Sherry said.
The Government will closely monitor how consumers and industry respond to the First Home Saver PDS and apply those lessons in developing solutions for other products.