In brief
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On 13 December 2010,
ASIC issued a regulatory guide and class order relief that clarify the law in relation to the online disclosure of regulated financial services documents such as product disclosure statements (
PDS), financial services guides (
FSG) and statements of advice (
SOA).
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ASIC has confirmed that online disclosure is permitted, and has given class order relief to promote greater confidence in delivering PDSs, FSGs and SOAs online. However, clients must generally give their express agreement to receive online disclosure, and ASIC has not given relief to enable SOAs to be delivered via hyperlinks.
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The regulatory guide also contains good practice guidance to ensure clients continue to receive clear, concise and effective information where disclosures are delivered online.
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This development provides welcome certainty to the industry, and financial services providers should be reviewing their disclosure procedures in light of this guidance.
Uncertainty about online disclosure
The Corporations Act expressly permits a wide range of financial services disclosures to be delivered online, including PDSs, FSGs, SOAs, transaction confirmations, periodic statements and ongoing disclosures of material changes and significant events. There has generally been no issue with disclosures sent as text in an email or an attachment to an email.
However, there has been uncertainty about a number of aspects of the disclosure requirements where disclosures are made by sending an email with a hyperlink to the disclosure, or by sending a paper or electronic notice that the disclosure is available from a website. These uncertainties include:
(a) whether the requirement to allow the client to have ready access to the disclosure in the future restricts the use of these online methods to deliver disclosures because the disclosure might not be accessible via the link for an indefinite period (the Continuing Access Issue);
(b) whether a client must agree to receive disclosures online, and if so, whether that agreement must be express or can be inferred from their conduct (eg by merely nominating an email address) (the Consent Issue); and
(c) whether the requirement that a PDS, FSG or SOA must be delivered in a way that allows the provider to be satisfied that the client or the client’s agent has received the disclosure means that when such a document is delivered online, the provider must have a mechanism to track whether a client has accessed the disclosure on the website (the Receipt Issue).
ASIC’s response
In relation to the Continuing Access Issue, ASIC has confirmed that the continuing access requirement does not prevent the use of hyperlinks and references to website addresses in delivering disclosures. However, ASIC suggests that providers:
(a) direct clients to take an electronic or printed copy of the disclosure; and
(b) ensure the disclosure continues to be accessible for a reasonable period (ASIC considers 2 years would be reasonable for most disclosures).
In relation to the Consent Issue, ASIC considers that generally, unless the law provides otherwise, a provider must obtain a client’s express agreement before delivering financial services disclosures online. This consent can be verbal or in writing. (For example, this could be achieved by ensuring that the section of the PDS application form containing the space for the client to nominate their email address includes a statement to the effect that by nominating the email address the client agrees to receive disclosures online.)
In relation to the Receipt Issue, ASIC recognises that having to track whether a disclosure has been accessed would present practical difficulties for providers and discourage them from delivering these documents online. Accordingly, ASIC has granted class order relief to enable:
(a) PDSs, FSGs and SOAs to be delivered by sending a written (paper or electronic) notice with a reference to a website address where the disclosure can be found; and
(b) PDSs and FSGs to be delivered by sending an email with a hyperlink to the disclosure.
ASIC has denied hyperlink delivery relief for SOAs because these documents are personalised and ASIC considers hyperlink delivery involves a greater exposure to security risks (eg phishing).
ASIC’s Good Practice Guidance contains additional suggestions for online disclosures.
For further information, please contact:
Michael Hodgson | Special Counsel
T +61 2 8233 9756
F +61 2 8233 9555
