Guide to Product Disclosure Statements (PDS)

PDS stands for Product Disclosure Statement. PDS is the document that contains all the details related to a financial product. PDS is introduced to clarify the financial product such as insurance to the potential buyer. PDS helps the client to decide whether to go or not go for that particular financial product.

Roles & Responsibilities

  • According to the law, any financial product seller must be aware its customers of the pros and cons of the financial product.
  • There are different types of laws about PDS in different countries of the world.
  • The details of PDS may be covered in one document, or a number of documents can be used for defining the product disclosure statement.
  • The PDS may contain Supplementary Product Disclosure Statement if the PDS detail is lengthy.
  • If the purchase is not a financial product, there is no need for PDS. For example, buying a house is excluded from PDS.
  • One must check the complete information about PDS at the product disclosure register website.

Content included in the PDS.

A PDC includes the following details:

  • Complete information about the financial product
  • Essential information about the investment
  • The risk involved in the investment
  • Some essential information about the organization offering the financial product

There are different specifications for the PDS of different investment products. Such as:

  • In Bonds, the length of PDS is a maximum of 30 pages. The word count is limited for the bond’s PDS is up to 15,000 words. The PDS of bonds includes the information about the issuing authority of the bond. Some additional information is also there about the time of maturity of the bond and how the money will raise during the process of the bond.
  • The product disclosure statement is limited to 12 pages or less in managed funds, and the maximum word count is 6000 words. The statement includes information about the investment scheme of managed funds, the risk involved in it, and about returning these funds.
  • There can be 60 pages of PDS in shares, and the total number of words for shares can be 30,000. The PDS information discloses the current value of the financial product, the business’s assessment, and the use of raised money.
  • In derivatives, the PDS should be summed up in 15,000 words, and it can take 30 pages to complete. The information in PDS tells about the functioning of a derivative, its pros, and its risks.

Features of PDS

  • A PDS includes the issuer’s name, offers, and scheme number of the financial product.
  • The website of the product disclosure register includes information such as a financial statement of investment and how the investment provider handles the financial investment.
  • The details regarding investment must be kept to the point and up to date so that the buyer can look for the latest offers regarding that financial product online.
  • The buyer can also look for financial advice and information about PDS from its financial advisor.

A PDS must have:

  • A PDS must be on time and updated.
  • A PDS must include a fair comparison of products with its competitors.
  • A PDS must be according to the needs of the clients.
  • The necessary information regarding the financial product must be highlighted in the product.
  • A PDS must disclose the complete information about the product, which the client can easily understand.
  • The information shared in PDS must be complete and related to the given financial product.

Frequently Asked Questions

1. Why is it essential to read PDS before buying a financial product?

  • Many clients don’t take an interest in reading and understanding the information given in the PDS of the financial product. But it is essential to consider reading PDS before finalizing the deal for the financial product.
  • Reading and understanding PDS ensures that you are buying an excellent financial product, and if there is something disclosed in PDS that doesn’t suit you, you can halt the investment to clear the confusion.

2. What is the difference between a Product Disclosure Statement and Financial Services Guide?

  • The PDS contains product-related information. At the same time, the FSG document contains more information than the product.
  • PDS does not have more information about the other financial products offered by the provider. At the same time, the FSG document includes details of all other financial services provided by the service provider.

Leave a Reply

Your email address will not be published. Required fields are marked *