Corporations Regulation 7.9.07FA provides an exemption from the requirement by AFS Licensees to give a Product Disclosure Statement (PDS ) for basic deposit products (BDPs), non‑cash payment facilities(NCPFs) attached to basic deposit products and travellers cheques.
However, if a PDS is not given, reg. 7.9.07FA provides that:
(a) the licensee must provide the client with information about the cost of the product;
(b) the licensee must inform the client as to whether or not any amounts will or may be payable after acquiring the product;
(c) the licensee must ask the client if they want any further information about those amounts; and
(d) if the client indicates that he or she would like this further information, the licensee must provide it.
If the PDS is dispensed with, these information requirements would need to be incorporated into the credit union’s documents and procedures. The normal practice is to include the information required by (a) and (b) in the terms and conditions and/or a product rates and fees document. Items (c) and (d) are procedural requirements and would need to be reflected in the credit union’s procedures for issuing products.
The Mutual Banking Code of Practice requires general information about the credit union’s products and facilities to be readily available to anyone who wants it (clause 2.1), and a copy of the terms and conditions must be provided to members if they ask for a copy: clause 2.2.
In addition, the credit union would still have to use a PDS for financial products other than BDPs and NCPFs, such as retirement savings accounts and insurance products.
Members would need to be notified that the PDS is no longer issued and that the relevant product details can be found in the terms and conditions and/or product rates and fees document.
Bright Law can assist you with drafting or reviewing changes to documents and procedures.