ASIC has recently released Consultation Paper 224 seeking feedback on its proposed relief and updated guidance (revised RG 221) to facilitate electronic delivery and more innovative use of product disclosure statements (PDSs).
ASIC Commissioner John Price said, ‘ASIC is focused on making disclosure more effective and meaningful for consumers of financial services. We want to encourage more innovative ways of delivering important information presented in a way that consumers can understand and act on.’
Recognising that existing PDSs can often be lengthy documents that are difficult to understand, ASIC has released the following proposed relief for consultation:
- permitting all disclosures to be made available electronically (i.e. on a website) and notifying the customer of such by email, SMS, voice call, etc;
- no consent will be required to use a customer’s email address to deliver disclosures electronically; and
- facilitating the use of more innovative PDSs.
There is no doubt that ASIC has been keenly watching the UK Financial Conduct Authority (FCA), which launched its Innovation Hub in October 2014, with the same aim of encouraging innovation in financial services.
The regulation of tomorrow has finally arrived in Australia, and not long after its arrival in the UK. If you want a flavour of what’s ahead for us, visit the FCA’s website.
Innovative and interactive PDSs
ASIC has recognised the benefits of encouraging providers to explore new ways of delivering mandated disclosures to facilitate a better understanding of financial products and services by consumers.
The draft regulatory guide (RG 221) notes that PDSs can be in electronic form, potentially incorporating a range of multimedia features such as video, audio, interactive menu features, radio buttons, Q&A, animation and “gamification” (e.g. a game type app to test the consumer’s knowledge of the product and its suitability for them).
However, ASIC recognises that there may be potential legal barriers to the use of such technology.
To encourage the use of interactive multimedia PDSs, ASIC is proposing to grant relief from a number of requirements that will enable the use of such innovation.
ASIC further proposes to update its regulatory guidance to allow a product to have more than one PDS, such as a printable version and an interactive version.
Electronic delivery of credit disclosures
Finally, ASIC is also proposing to align the treatment of financial services disclosures and credit disclosures in the future.
ASIC is calling for submissions on its proposed relief by 16 January 2015. The updated regulatory guide and class orders are due for release in March 2015.
In this ever-changing landscape, the challenge is to try to understand the direction of innovation and to proactively identify the legal pathways to facilitate that change, or the regulatory barriers that need to be removed to do so.
While the “benefit” will be in the detail of ASIC’s proposed regulatory relief, it is encouraging to see ASIC proactively engaging in this regulatory innovation in consultation with industry.
Norton Rose Fulbright is already at the forefront of advising clients in respect of digital disruption in the financial services space and more broadly. Contact us if you would like a copy of our paper “Disruptive Innovation: Regulation Tomorrow“.
We have also advised clients in relation to the movement towards crowd-funding platform structures, digital currencies and the utilisation of mobile technology to better reach and service clients.