We know that disclosure documents can seem overwhelming at first however, they contain important inofrmation about the financial product or service you may be considering.
So, let’s breakdown what these documents are, how they help you and why they matter when investing.
Product Disclosure Statement (PDS)
A Product Disclosure Statement (PDS) is a document that financial service providers must provide to you if you’re looking to buy a financial product. This is prepared by or on behalf of the issuer or seller of the financial product and will include information about the product’s key features, fees, commissions, benefits, risks and the complaints handling procedure so that you can make an informed decision about whether to acquire the product.
Terms and conditions
Terms and conditions (T&Cs) are a set of rules and guidelines that outline the rights, responsibilities, and obligations of both the service provider and the user (eg. you as the investor).
They’re designed to protect both parties and ensure that everyone understands the expectations and limitations of using a particular service (eg. a trading platform) or product (eg. a settlement account).
Financial Services Guide
A Financial Services Guide (FSG) is a document that financial service providers in Australia are required to give to their clients when a client wants a financial service (eg. financial product advice or acquiring a financial product).
This is prepared by the financial service provider and contains important information to help clients understand who the financial services provider is and to make an informed decisions about whether to acquire the financial services being offered.
The document provides information including:
- Who the financial services provider is
- What services they offer and the kinds of financial products to which those services relate
- How the provider and its representatives are paid (remuneration), which includes details about any commissions or other benefits that may apply
- Details of any associations or relationships that might be expected to influence the service provider in providing the services, and
- Complaints handling procedure and compensation arrangements
Target Market Determination (TMD)
A Target Market Determination (TMD) is a document which describes who a product is appropriate for (‘target market’), and any conditions around how the product can be distributed to customers.
The purpose of this is to ensure that the design and distribution of the product is directed to customers within the target market for that product consistent with the TMD.
