About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, April 26th, 4:56PM
Latest Headlines

Investors: PDS still too complicated

Investors have told the Financial Markets Authority (FMA) there is still room to improve product disclosure statements (PDS).

Wednesday, April 11th 2018, 6:00AM

by Susan Edmunds

PDSs were brought in with the Financial Markets Conduct Act. They are meant to provide an easier-to-understand outline of how financial products work, including the risks and returns involved and any fees and charges.

Investors must be given a PDS before they hand over any money.

The FMA has released new research on investors’ use of the PDS, which shows that while they felt the documents were an improvement over previous disclosure information, they still thought they could be repetitive and long, the language could be academic and they struggled to find the key information to help their decision-making.

Garth Stanish, FMA director of capital markets said, “The significant work issuers have put into PDS documents is paying off, with investors paying attention to the information. The PDS is a significant improvement to the previous disclosure regime and this research provides valuable insights from investors into how the PDS can be improved further.”

While financial information was viewed as critical, many investors told the FMA this part of the PDS was overly complex rather than providing useful information. One investor told researchers, “it gets a bit much after a while. I leave that to my broker.”

Investors also wanted the key risks section of the PDS to reflect risks that were unique to the offer and give explicit detail on how this may affect their investment returns. Investors suggested this would help companies be more self-aware and clear about their ability to deliver the returns they promise.

Issuers were told to consider simpler language, include analysis and commentary, focus on more specific risks and consider how to disclose information such as ESG reporting.

Thirty-nine per cent of investors read some of the PDS and 19 per cent said they read all of it. Those with prior investing experience were more likely to trust the PDS. Just over 40% said the PDS was “about the same” in terms of relevancy to their decision-making compared to other offer documents.

Investors also explained that they wanted to see more detailed information about the company and its management, especially about a company’s board of directors and senior management.

Adviser Alistair Bean he assumed his clients would not read a PDS in full.

“I take my clients through a PDS as best I can, pointing out what the investment is, what they are investing in, how much it will cost, associated risk comparisons to other investments and so on with further research as required. For existing products, past performance is purely historical although a good indicator, dependent on current market conditions.

“What I particularly look for who are the directors - have they been bankrupted or banned from being a director, previous companies - and what other disclosures are they giving.  Also, what, if any associated debts of any issuance of the product.”

Another adviser, Brent Sheather, said it was not worth reading too much into the research.

"It's just based on a survey of 12 people and every one of those are members of the shareholder NZ Shareholders Association whom are obviously a bit more engaged with investment matters and in particular individual shares than your average retail investor. 

"This was confirmed by the fact that the only products they looked at were IPOs, bond offers  and property syndicates and the majority of these investors were male and over 60 years of age."

He said fees were not fully disclosed.

The Ministry of Business Innovation and Employment has also released a discussion paper outlining its plans for disclosure regulations under the new regime, including around fees.

You can read the details, including plans to make commissions publicly available, here.

Tags: Disclosure FMA

« Make commission details publicly available: MBIECode proposals 'baloney' »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment



Printable version  


Email to a friend
News Bites
Latest Comments
  • An inquiry? Careful what you wish for
    “Hi Paul Maybe you didn’t read what Mr Orr said? He said “NZ’s bank culture is infinitely better”. That is outside...”
    13 hours ago by Brent Sheather
  • An inquiry? Careful what you wish for
    “@Barry It was easy to see the point Ms Orr was trying to make - a good headline (some might say that I've done that myself...”
    14 hours ago by Murray Weatherston
  • An inquiry? Careful what you wish for
    “@Barry It was easy to see the point Ms Orr was trying to make - a good headline (some might say that I've done that myself...”
    14 hours ago by Murray Weatherston
  • An inquiry? Careful what you wish for
    “ My favorite recent question at the commission to the Association of Financial Advisers; 'If an ASIC banning order isn't...”
    14 hours ago by Barry Read
  • An inquiry? Careful what you wish for
    “Where is Fred Dodd's evidence that "you would only end up with 20% of that money in ANZ products"? Mr Dodds needs to get...”
    15 hours ago by Graeme Tee
Subscribe Now

Weekly Wrap

Previous News


Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.75 5.15 5.49
ANZ Special - 4.25 4.65 4.99
ASB Bank 5.80 4.79 4.99 5.29
ASB Bank Special - 4.39 4.59 4.89
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.39 4.49 4.99
BNZ - Std, FlyBuys 5.90 4.99 5.29 5.59
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.45 5.50 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 5.00 5.20 -
Housing NZ Corp 5.79 4.79 5.05 5.29
HSBC Premier 5.79 4.19 4.29 4.89
HSBC Premier LVR > 80% - - - -
HSBC Special - - 3.95 -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.79 ▼4.99 ▼5.35
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.29 ▼4.49 ▼4.85
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special 5.00 - 4.75 -
SBS Bank 5.89 4.95 5.19 5.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.29 4.64 4.99
Sovereign 5.90 4.79 4.99 5.29
Sovereign Special - 4.39 4.59 4.89
The Co-operative Bank - Owner Occ 5.75 4.39 4.59 4.99
The Co-operative Bank - Standard 5.75 4.89 5.09 5.49
TSB Bank 5.80 4.79 5.05 5.45
TSB Special - 4.29 4.55 4.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.99 5.19 5.44
Westpac - Offset 5.95 - - -
Westpac Special - 4.39 4.65 4.94
Median 5.82 4.79 4.99 5.29

Last updated: 23 April 2018 8:07am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%


About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by Web Developer and eyelovedesign.com