Website links vs PDFs for sending disclosure documents
The days of mailing clients hard copy Product Disclosure Statements (PDS), or financial adviser disclosure statements, are numbered. Increasingly, clients are happy to receive these disclosure documents electronically. Strategi is regularly asked if providing a website link to these documents will suffice.
The Financial Advisers Act 2008 (in relation to adviser disclosure statements), and the Financial Markets Conduct Act 2013 (in relation to PDSs) both talk about ‘providing’ or ‘giving’ the relevant document. Strategi has sought FMA clarification. Its view is:
The legislation does not forbid it, but we don’t recommend it in terms of offerors, and so we think we would apply the same logic to Financial Advisers, due to the same risk of web site link breaks.
The FMA website goes on to explain:
Can an offeror send a PDS electronically to a prospective investor?
Yes. Offerors need to ensure investors are given the PDS before applications to invest are accepted. The best way to do this electronically is to email the PDS directly to the investor. In any event, the investor must be able to store the PDS in a permanent and legible form. We recommend offerors should not email web links, which could break and cannot usually evidence that the investor has actually been given the PDS.
However, if the application form used by an investor was attached to the PDS, the application form prominently identifies the relevant PDS and the form includes a written confirmation that the investor has received the PDS, then the offeror is treated as having given the PDS to the investor, even if only a web link was originally sent to the investor.
Strategi recommends financial advisers apply the above guidance in a broad context. If information is not material to the advice and is not something that must be provided to a client under legislation or regulation, then it could be conveyed via a website link. However, material information should be conveyed either via hard copy or an attachment to the advice document.
Other ways to consider providing this information is via:
- Inserting the information as a ‘thumbnail’ in the body of an advice document plus also have it as an appendix to the advice document. This works well for shorter documents.
- Having a client/adviser portal and uploading the relevant document to the client portal and sending the client an email notifying that the document is available for viewing. However, if this approach is followed then it would be prudent for the notification email to outline why the client should read it.
Contact us if you would like to discuss other ways of communicating important documents to clients.