7Contents of section 5 (The risk of losing money)

7 Contents of section 5 (The risk of losing money)

(1) Section 5 of the Product Disclosure Statement for a margin loan must include a description of the risks associated with margin lending to a borrower for the margin loan, including a description of any of the following risks, if relevant:

(a) the risk that the value of the borrower’s investment may fall and the possible consequences to the borrower if this occurs, in particular the risk of a margin call occurring;

(b) the risk that the provider of the margin loan may change the loan‑to‑value ratio of an investment at any time and the consequences to the borrower of the change, in particular, the risk of a margin call occurring;

(c) the risk that the provider of the margin loan may remove an investment from the Approved Securities List and the consequences for the borrower if this occurs, in particular, the risk of a margin call occurring;

(d) the risk that the interest rate for the margin loan may rise and the consequences for the borrower if this occurs, in particular, the possibility that interest payments owed by the borrower may exceed the returns available from the borrower’s portfolio;

(e) the risk of the loss of property of the borrower if the property has been mortgaged as security for, or in connection with, the margin loan;

(f) the risk of a default event under the loan agreement occurring and the potential consequences for the borrower if a default event does occur;

(g) the risk that the taxation laws may change and that this may have a negative effect on the tax position for the borrower for the margin loan;

(h) any other significant risks that a reasonable person would consider to be relevantly associated with the margin loan.

(2) Section 5 of the Statement must include a hyperlink to the page on a website operated by or on behalf of the Commonwealth that provides information about margin loans.

(3) Section 5 of the Statement may include information about risks associated with margin lending other than the risks mentioned in subclause (1).

(4) Section 5 of the Statement may provide for the information mentioned in subclause (3) by applying, adopting or incorporating a matter in writing.