We recently assisted a student from AIFA Institute with a problem question involving defects in a PDS. In the problem scenario, the client had chosen that her superannuation be paid into a registered, complying, public-offer superannuation fund. Within that superannuation fund, she opted for the Extreme Growth option. She was given a PDS. Her superannuation decreased as result of the extensive use of derivatives. The derivatives were not mentioned in the PDS.

Disclosure required for investment choices

A trustee can offer to a member of the fund a choice of investment strategies. The requirements for proactive disclosure of information (rather than disclosure on request) differs depending on the type of fund.

(a) Self managed superannuation funds

For a self-managed superannuation fund, the fund must provide the beneficiary of the fund with information regarding the investment objectives of each of the strategies being offered by the fund. The trustee must also provide all the information it reasonably believes would be needed by the beneficiary for the purpose of understanding the effect and risk of each of the strategies: Superannuation Industry (Supervision) Regulations 1994 (Cth), s 4.02(1) – (2).

(b) Other funds

Where the fund is not a SMSF, consider whether Part 7.9 of the Corporations Act 2001 (CTH) provides obligations to provide a product disclosure statement.

Part 7.9 applies to “regulated persons”. Regulated persons include an “issuer of a financial product”: Corporations Act 2001, s 1011B.

The Superannuation Industry (Supervision) Act 1993 defines “superannuation interests” to mean “a beneficial interest in a superannuation entity”: s 10(1). These interests are are financial products for the purposes of the Corporations Act: Corporations Act 2001, s 764A(1)(g).

Superannuation interests are issued when a person becomes a member of a fund: Corporations Act 2001, s 761E(3).

An obligation to provide a PDS arises when the financial products are offered for issue to retail clients: Corporations Act 2001 s 1012B(3), 1012B(4).

The content of the PDS must comply with the “prescribed requirements” contained in the Corporations Act 2001 ss 1013B-1013K.

Relevantly to omissions to disclose risky asset classes in an investment option, a PDS must contain:

  • “information about any significant risks associated with holding the product”: Corporations Act 2001, s1013D(c);

  • “information about any other significant characteristics or features of the product or of the rights, terms, conditions and obligations attaching to the product”: Corporations Act 2001, s 1013D(f); and

  • subject to certain matters, “any other information that might reasonably be expected to have a material influence on the decision of a reasonable person, as a retail client, whether to acquire the product”: Corporations Act 2001, Corporations Act 2001, s 1013E.

In terms of the format of the PDS, the Corporations Regulations 2001, Chapter 10D provide, that where a PDS is necessary for superannuation products it must:

  • describe, in the form of a summary, the significant risks of the particular superannuation product;

  • for at least one MySuper product or investment option, state the name of the MySuper product or investment option and give a short description of it, including the type of investors for whom it is intended to be suitable; and list the asset classes in which the MySuper product or investment option invests, and set out, in the form of a range or otherwise, the strategic asset allocation of the asset classes.

It appears that the PDS may direct the customer to other information regarding the product. This is supported by Section 1017BA of the Corporations Act which states that trustees of regulated superannuation funds have an obligation to make a product dashboard publicly available on its website.


Section 1016F provides remedies for person acquiring financial product under defective Product Disclosure Document. It provides that if the responsible person for the financial product becomes aware that it is defective (s1016E(c)), they must do certain things including offering returns of moneys invested, giving options to remain in the investment and issuing a new PDS. Breach of that section can entitle investors to relief under Section 1016F. That section entitles them to a refund of moneys, if sought within 30 days of issue of the products.

Section 1022B states that a civil action for loss or damage is available where a person gives another person a disclosure document or statement (which includes a PDS) that is defective in circumstances in which a disclosure document or statement is required by a provision of Part 7.9 of the Corporations Act to be given (1022B(c)(i)).

“defective” includes an omission from the Product Disclosure Statement of material required by section 1013C (which includes the material 1013D), or a misleading or deceptive statement.

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