A Product Disclosure Statement (PDS) is a document that provides detailed information about a financial product, such as an investment, home loan or mortgage product, or insurance policy. It is designed to help potential investors or policyholders understand the features, risks, and costs associated with the product, and to make an informed decision about whether or not to purchase the product. The PDS typically includes information on the product’s objectives, fees, charges, and performance, as well as any significant risks or benefits that it may offer. Financial institutions in Australia are required by law to provide a PDS to customers before they can sell or recommend a financial product.
When researching the PDS you’re able to make direct policy comparisons between one lender or another. Important information to review includes the following:
- fees and other costs
- key features
The PDS should also list important details about the company, such as:
- commissions, if the business pays or receives money from any other source but the customer for selling the product, and
- their complaints handling process.
ASIC also recommends clients review the lender’s Target Market Determination (TMD) policy so you’re able to measure the product against your own requirements.
How is a “Financial Product” Defined?
A financial product is anything that helps you to save, invest, get insurance or borrow money, but not all financial products need to have a PDS. The types of products that do not need a PDS include basic deposit products, such as basic savings or transaction accounts, some self-managed superannuation funds, and most credit products. A PDS is also not required if the person buying the product already has a financial product of the same kind (e.g. when you renew a product such as an insurance policy, in some cases).
You can check with the institution or company selling any product you’re considering to confirm whether a PDS is available.
Other Important Documents
Other documents will be supplied to you in addition to the PDS. Each mortgage product may vary but you should expect to review a mix of the following:
- Target Market Determination (TMD). Yhe TMD sets out the intended retail audience of a product.
- Financial Services Guide (FSG), which describes the financial services offered by a company which has an Australian Financial Services Licence (typically not provided by mortgage brokers, but you may see the guide if a referral was made).
- Credit Guide (CG). The Credit Guide is a requirement for any company that operates under an Australian Credit Licence. The document includes important information about any company offering consumer lending products, such as home loans and credit cards.
- Terms and conditions documents. This document is often used for products that do not require a PDS. For example, you may receive a Key Facts Sheet (KFS) when you apply for a home loan or a credit card, or a terms and conditions brochure for a transaction or savings account.
There may also be a range of other disclosure documents available, depending on the type of financial products being offered. Most home loan products are kept relatively simple, and your broker will ensure you receive all the appropriate information relating to a recommended product.
We make a large amount of real-time lender data available on our website to ensure that you always have suitable research material. Some of the products shown will include either a PDS, Fact Sheet, or similar, rendered as a PDF on product result pages.