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.
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:
- 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
- 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:
- 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;
- 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;
- further relief under Class Order 15/647 to enable super funds to use email addresses provided by the member's employer;
- 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.