Written byA product disclosure statement (PDS) is the document a product issuer must give a retail customer before they buy a financial product, setting out its features, risks, fees and costs.
Also known as: PDS, disclosure document
Key points
- A PDS covers many retail financial products: managed investment schemes, insurance, superannuation, deposit products and derivatives. Shares and other securities use a prospectus instead.
- The obligation sits in the Corporations Act 2001, and ASIC Regulatory Guide 168 explains how issuers should meet it.
- It must be given before a retail customer acquires the product, and it must not mislead, including by leaving things out.
- Under the design and distribution obligations, a PDS works alongside a target market determination that says who the product suits.
- Fees are disclosed in detail: ongoing, establishment and transaction costs, with worked examples of their impact.
What a PDS must include
A PDS is a structured document, and a good one lets a typical retail investor grasp the essentials quickly. It describes the product and who it is for, explains how it works and how any returns are generated, and lists the key risks, including specific exclusions for insurance or liquidity limits for investments. Fees and costs are set out in detail, with example scenarios showing what they mean in dollars.
It also covers cooling-off rights and exit terms, how to make a complaint and reach the external dispute resolution body, how you will receive ongoing statements and updates, and how material changes will be communicated through a supplementary or replacement PDS. It signposts the target market determination and gives the issuer's name, ABN or ACN and contact details.
How a PDS fits with other disclosure documents
A PDS explains the product. A financial services guide (FSG) explains the adviser or firm giving the advice: its services, fees, relationships and dispute options. A target market determination (TMD), required under the design and distribution obligations, is compliance-facing: it records who the product is appropriate for, how it may be distributed and when it must be reviewed. The PDS informs the buyer; the TMD guides distribution.
Marketing material must not contradict the PDS. Ads are brief and can leave detail out, but the PDS contains the legally required information, so if the two differ, the PDS is what the issuer is held to. If a material change occurs mid-offer, the issuer must issue a supplementary or replacement PDS and notify existing customers.
How to read a PDS
Start with the first couple of pages, usually a key facts or example box, for the product type, intended customer, minimums and a one-line risk summary. Then check fees and costs, comparing management fees, transaction costs and any performance fees using the worked examples. Identify the key risks and exclusions, note cooling-off and exit timeframes, and see where the PDS points to its TMD.
Red flags include complex fee structures with no worked examples, vague statements about risk with nothing behind them, and frequent supplementary notices, which can signal unstable product terms. If the PDS is missing or misleading, raise it with the issuer's dispute resolution team first, then the external dispute resolution body or ASIC. Misleading statements in a PDS can lead to civil liability under the Corporations Act.
Example
A tradie takes out income protection insurance through an adviser. Before they sign, the insurer must give them the PDS. Reading it, they find a waiting period before benefits start, an exclusion for a pre-existing back injury and a higher premium for paying monthly rather than annually, none of which the brochure mentioned. The PDS also points to the target market determination, which describes who the policy is designed for, so the adviser can confirm it fits the tradie's circumstances or suggest something else.
Not to be confused with
- Financial services guide (FSG)
- an FSG explains the adviser or firm providing the advice; a PDS explains the product itself
- Design and distribution obligations (DDO)
- the DDO regime requires a target market determination that guides who a product is sold to, while the PDS informs the buyer
- Credit guide
- a credit guide is the disclosure document for loans under the NCCP Act; a PDS covers financial products such as insurance and super
Frequently asked questions
Is a PDS legally binding?
A PDS is not the contract itself, but it is not just marketing either. Misleading or false statements in a PDS can trigger civil liability under the Corporations Act and ASIC enforcement, and a purchaser can rely on what the PDS says in proceedings. Treat it as the issuer's formal account of the product.
Where do I find a PDS?
Issuers must make the PDS available before you acquire the product, and most publish it on their website as a downloadable PDF or web page. ASIC allows electronic delivery where the document is likely to be read. If you cannot find it, use the issuer's contact details to request a copy.
Can a PDS be updated after I have read it?
Yes. If a material change occurs during an offer, the issuer may need to issue a supplementary or replacement PDS and notify affected customers, as required by the Corporations Act and ASIC Regulatory Guide 168. Frequent supplements are worth noting, because they can indicate the product's terms are not settled.
What is the difference between a PDS and an FSG?
A PDS explains a financial product: what it does, its risks, fees and how to buy or exit. A financial services guide explains the adviser or firm providing the advice: the services offered, how they are paid, any relationships that could influence them, and how to complain. You may receive both.
What should I check first in a PDS?
Read the key facts or example box on the first pages for the product type, who it is intended for, any minimums and a summary of the main risk. Then compare fees using the worked examples, look for exclusions and exit terms, and find the signpost to the target market determination.
Related terms
Financial services guide (FSG)
A financial services guide (FSG) is the plain-language disclosure document a licensed financial firm gives retail clients, explaining its services, how it is paid and how to complain.
Read definitionDesign and distribution obligations (DDO)
Design and distribution obligations (DDO) are rules requiring the issuer of a retail financial product to define its target market and distributors to take reasonable steps to sell within it.
Read definitionASIC
ASIC is the Australian Securities and Investments Commission, the regulator for companies, markets, financial services and consumer credit, which licenses providers, keeps public registers and enforces conduct laws.
Read definitionInsurance
Insurance is a contract where you pay a premium and an insurer covers specified losses, such as damage to a financed asset or a lender's loss on default.
Read definitionFees
Fees are the explicit charges a provider applies for a financial product or service, separate from interest and covering access, administration or transactions.
Read definitionCredit guide
A credit guide is a prescribed disclosure document that a broker or credit licensee must give a consumer before providing credit assistance, covering licence details, remuneration and complaints handling.
Read definitionGo deeper
Sources
This article is general information only and is not financial advice.