ASIC facilitating electronic financial services disclosure

30 July 2015

On 28 July 2015, ASIC released new regulatory guidance and waivers to further enable financial services disclosures to be provided through digital channels. This initiative also encourages innovation in other areas of communication about financial products and services. The developments largely concern disclosure to retail clients, including product disclosure statements, financial services guides and statements of advice. However ASIC's stance signals a positive and more general intent to adapt the Australian regulatory framework to embrace new technologies.

Background

ASIC's press release (15-198MR) notes the statement from ASIC Commissioner John Price that these measures "respond to changing consumer preferences, with ever increasing numbers of people transacting digitally. Almost 15 million Australians now have a home internet connection and 68% of those online are using three or more devices to access the internet."

While the Corporations Act expressly permits the digital delivery of financial services disclosures, in its consultation last year ASIC noted two principal areas of concern with the previous regulation:

  1. for most financial services disclosures, previous ASIC  guidance and legal requirements meant that the default method of delivery was a printed disclosure document. This was limiting the various benefits which would otherwise flow from digital delivery, including cost savings and the ability for providers to present more innovative and engaging content; and
  2. barriers to more innovative and interactive web-based disclosure were limiting disclosure options. These barriers included technical and regulatory requirements which implied a print version and placed limits on fully electronic product disclosure statements.

ASIC's new guidance and relief

In order to address the identified areas of concern and facilitate the use of digital disclosures, ASIC has taken various steps in its revised Regulatory Guide 221 and new Class Orders 15/647 and 15/649. These steps comprise:

  1. explaining how electronic delivery methods can be used relying on the existing provisions of the Corporations Act, with clarification around when providers can treat email addresses as having been nominated by clients for these purposes;
  2. relief under Class Order 15/647 to enable providers to "publish and notify" i.e. make disclosures available digitally and notify the client of the availability;
  3. further relief under Class Order 15/647 to enable super funds to use email addresses provided by the member's employer;
  4. relief under Class Order 15/649 and guidance to facilitate the use of more innovative product disclosure statements, financial services guides and statements of advice.

In addition, ASIC has updated its good practice guidance in RG 221 to help ensure that clients continue to receive clear, concise and effective information when disclosures are given electronically and consumer protections are maintained in the digital environment.

More generally, ASIC has not at this stage identified a need for guidance or relief for other areas of the Corporations Act that relate to digital disclosure. This is because in ASIC's view the Corporations Act is otherwise generally drafted in a way that is wide enough to accommodate digital methods of delivery and digital formats for disclosures. However, in encouraging providers to explore more innovative forms of disclosure, ASIC has stated that it is open to granting individual relief to facilitate the use of these kinds of disclosure.

Nikki Bentley

I understand the financial services industry and thrive on helping our clients in this industry succeed.

Nikki Bentley Partner

Nikki is the Group Leader of Henry Davis York's Corporate Group, which includes the legal teams for Corporate / Mergers & Acquisitions; Investments & Financial Services and Tax.

Nikki is a leading investment funds advisor specialising in financial services and corporate law.  She specialises in business establishment and structuring, fund establishment, funds merger and acquisition, product disclosure and distribution. Nikki leads HDY's corporate group which combines expertise from the Financial Services, M&A and Tax areas.

Nikki provides advice to leading Australian and global fund managers on a full range of corporate, commercial and regulatory issues facing their businesses. She has considerable experience in assisting clients with fund establishment (onshore and offshore), disclosure and distribution. Nikki regularly advises clients on establishing, buying, selling and restructuring their businesses. She also regularly assists clients responding to regulatory enquiries and investigations.

With more than 15 years funds management experience in private practice, government and as an in-house lawyer, Nikki's practice spans the range of funds management products, with particular expertise in hedge funds, property funds and equities.

Nikki is regularly involved in industry and government discussions on regulatory reforms impacting the Australian funds management industry. Nikki is a passionate advocate for the development of a new corporate collective investment vehicle because of the opportunities it could provide to grow the funds management industry. She is the Honorary Legal Counsel and Chair of the Regulatory Committee for the Australian branch of the Alternative Investment Management Association (AIMA) and is a regular participant on the Financial Services Council (FSC) working groups.

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Jon Ireland

I constantly strive for technical excellence and commercial outcomes that add real value for my clients.

Jon Ireland Partner

Jon has extensive experience in corporate and financial services law, specialising in complex transactions, funds management and investment distribution. Jon also advises on regulatory issues relating to the use of technology in financial services.

Jon provides advice to leading Australian and international financial services clients on the full range of corporate, commercial and regulatory issues facing these businesses. He has considerable experience advising them on establishing, buying into, selling and restructuring their businesses.

Jon regularly advises on funds management issues including fund structuring, disclosure, investment management and outsourcing arrangements. He has particular expertise in the area of investment distribution and has advised on key projects for platform operators and advice providers.

Recently, Jon has advised on the establishment of a fully digital investment platform, the negotiation of a material outsourcing arrangement for a global investment bank and a scheme modernisation project for a leading Australian fund manager. Jon has also recently advised on the establishment of the Australian operations of a global diversified financial services business, including regulatory and corporate issues related to its expansion.

Jon's clients value his advice on recent law reforms, including around product disclosure statements and the digital provision of financial services. Jon is consulting to the Committee for Sydney and is a regular participant on Financial Services Council working groups.

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