3Contents of section 1 (About [name of provider of the margin loan] and [name of margin loan product])

3 Contents of section 1 (About [name of provider of the margin loan] and [name of margin loan product])

Section 1 of the Product Disclosure Statement must include:

(a) a short description of the margin loan provider and its business; and

(b) a short summary of what margin lending is; and

(c) a statement setting out the possible consequences of borrowing money to invest, including the effect of magnifying both gains and losses; and

(d) a statement that the borrower for a margin loan should regularly monitor the borrower’s portfolio so that:

(i) the borrower can be aware of changes (if any) to the terms of the margin loan; and

(ii) the borrower can take timely action to prevent potential losses in relation to the borrower’s portfolio; and

(e) a statement that the borrower for a margin loan may need, at short notice, to pay an additional amount into the margin loan or sell some of the investments for which the margin loan is made; and

(f) a statement that the provider of a margin loan has the right in certain circumstances to sell all, or part, of the borrower’s portfolio and may not be required under the terms of the margin loan to provide notice to the borrower of its intention to sell; and

(g) a statement that if the value of the portfolio for a margin loan does not cover the cost of repayments for the margin loan:

(i) the borrower for the margin loan may need to access other funds to repay the margin loan; or

(ii) the provider of the margin loan may sell assets provided as security for the margin loan, for example, the borrower’s residential property; and

(h) a statement that the law requires the provider of a margin loan to:

(i) assess whether the margin loan is unsuitable for the potential borrower for the margin loan; and

(ii) if the potential borrower for the margin loan requests a copy of the assessment — to provide a copy of the assessment to the potential borrower for the margin loan.

Note The provider of a margin loan is not required to give the borrower or potential borrower for the margin loan a copy of the assessment if the margin loan is not issued.