4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance

The Product Highlights Sheet in Practice

Investors should be told to read all the disclosure materials and seek legal or investment advice if in doubt. (Section 3.4 lists the PHS contents.)

The SC's Advertising Guidelines

The Guidelines on Advertising for Capital Market Products and Related Services cover promotion through printed, electronic, digital or any other means, including:

UTS and PRS Consultants are advertisers under these guidelines and must:

1. give clear, fair and balanced information; no exaggerated, flamboyant, overstated or over-zealous messages;
2. treat investors fairly; never exploit a lack of expertise or knowledge;
3. make adverts easy to understand, especially for vulnerable groups such as the elderly;
4. keep content consistent with the prospectus, disclosure document and PHS;
5. keep information current and accurate;
6. make sure the advert is clearly identifiable as an advertisement;
7. ensure any third-party advertising provider follows the guidelines;
8. use testimonials only from people who have invested or used the service, and disclose any compensation in the same advert;
9. tell investors the advert is subject to warnings, disclaimers and terms;
10. direct investors to the prospectus, disclosure document and PHS, stating their issue date and where to get them;
11. state clearly that the advert has not been reviewed by the SC; and
12. not use the SC's name or logo or imply SC endorsement.

The guidelines also give guidance on specific elements (returns, features, benefits and risks; fees; comparisons, ratings and awards; past performance and forecasts; warnings; images and examples; timeliness; terms and phrases; jargon; target audience; complexity; promotion terms; regulators' logos) and on audio, film and video, internet and outdoor adverts. Complying with them does not remove other legal obligations.

The FIMM Code of Ethics adds that a Consultant must use only advertising and promotional material provided or approved by his Distributor.

Spot the breach

The Register of Unit Holders and Account Maintenance

Each Scheme Provider keeps a register of unit holders or PRS members containing a lot of personal data. Investors may ask to update it for:

• a change of mailing or email address;
• a new identity card number;
• a change of name;
• a new bank account; or
• a change in distribution reinvestment instructions.

Consultants must know the provider's requirements (for example, whether certified copies are needed, or whether all joint holders must sign). Not knowing them is poor service.

More complex events include the death of an investor, transferring units to a family member, or registering a lien or charge over units as security for a loan. Consultants should know the requirements and who in the provider handles them.

A PHS Walk-Through Checklist for Consultants

When presenting a PHS, a Consultant who follows the study guide and the Code of Ethics would cover:

1. What the fund is – the product, scheme, fund and Scheme Provider in brief.
2. Who it suits – the product suitability statement, compared with the investor's own profile.
3. Key features – objective, asset allocation, distribution policy and fees.
4. Key risks – in plain language, including the chance of losing capital.
5. Performance – average and annual total returns against the benchmark, with the warning that past performance does not indicate future performance.
6. Payment rules – never pay cash to the Consultant or issue a cheque in the Consultant's name.
7. Where to complain – the provider first, then FMOS, the SC and FIMM.
8. Next documents – where to get the full prospectus or disclosure document, and that the investor should read it before deciding.

Giving the investor time to read the PHS, and recording that it was provided, protects both the investor and the Consultant if a dispute arises later.