The Gift of ‘Giving’: DDO & Giving a PDS

There has been quite a bit of industry discussion concerning the ‘giving’ of a PDS under the DDO regime; specifically, whether making a PDS available electronically constitutes the ‘giving’ of the PDS, which in turn constitutes retail product distribution conduct (RPDC) for the purposes of the DDO regime.

Despite being over 3 years on from the commencement of the DDO regime, this issue has come into sharper focus following the Federal Court decision in ASIC v Firstmac Limited [2024] FCA 737 (Firstmac) handed down in July 2024, which considered the efficacy of reasonable steps in the context of giving a PDS to a retail client (among other things).

One of the key findings in Firstmac was that the relevant ‘reasonable steps’ must be carried out before the distributor engages in RPDC. Put another way, if giving a PDS constitutes RPDC, then any steps which are concurrent with or occur after the giving of the PDS will have no bearing on the likelihood that the RPDC will be consistent with the TMD[1].

The Firstmac decision has triggered product issuers to scrutinise the circumstances in which PDSs are provided to retail clients and whether such conduct is RPDC. This is a live issue across the industry given that most product issuers make PDSs available on their websites – and indeed, in some cases, this is mandatory.

In our view, simply making a PDS available on a website is not sufficient to trigger the ‘giving’ of a PDS for the purposes of the DDO regime and the Corporations Act.

In section 994A(1) of the Corporations Act, the definition of ‘retail product distribution conduct’ refers to both of the following conduct:

• giving under Part 6D.2 a disclosure document in relation to an offer of the product to a retail client;
• giving under Part 7.9 a Product Disclosure Statement for the product to a retail client.

In ordinary parlance, the concept of ‘give’ would connote a positive act by the ‘giver’ (for example, the product issuer or a financial adviser as required in specific circumstances by Part 7.9 of the Corporations Act) of giving the relevant documents to the recipient. Simply making a PDS available, for example to the world at large via a website, would fall short of this threshold.

This ordinary meaning is consistent with the usage imported into the Corporations Act. Importantly, the Corporations Act draws a distinction between the concepts of ‘give’ and ‘make available’ in a number of places. For example, in section 952D with respect to the giving of a defective disclosure document, the section expressly specifies that the prohibition is triggered where (1) the disclosure document is given to a person, or (2) the disclosure document is made available to a person (such as by website disclosure).

Similarly, section 1015C(5) contemplates that the regulations can specify ways in which PDSs may be given to a person. The relevant underlying regulation, being Regulation 7.9.02A expressly provides ‘alternative ways of giving’ a PDS, which includes making the PDS available to the person in a manner agreed.

It follows, in our view, that the concept of ‘giving’ a PDS is different to that of ‘making available’ a PDS on a website – the former being active conduct whereas the latter being more passive. For this reason, in DDO land, the mere making available of a PDS on a website does not, of itself, denote RPDC. Contrast the fact pattern in Firstmac, which involved actively ‘giving’ a PDS to a person by emailing a copy to them. This is an important inflection point in the DDO legislation as it means that conduct by product issuers, advisers and other distributors involving simply having the presence of a PDS on their website does not, properly construed, constitute the giving of the PDS.

Finally, it bears mentioning that ASIC has long held the view that providing a hyperlink to a PDS which is available on a product issuer’s website does not meet the requirement that the PDS be ‘given’ in accordance with section 1015C of the Corporations Act, which was the reason why ‘publish and notify’ relief was provided in 2015 to facilitate such disclosures (ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647). While ASIC’s view has never been tested in the courts, it is helpful to note that ASIC has granted relief and issued formal guidance which supports the view that a distinction should be drawn between ‘giving’ a PDS under Part 7.9 of the Corporations Act and merely making the PDS available on a website.

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