ASIC: Paving the Way for Electronic Disclosures

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ASIC have released a new Consultation Paper,  “Consultation Paper 224: Facilitating electronic financial services disclosure”, requesting feedback on ASIC’s proposed introduction of electronic delivery of financial services disclosures. In conjunction with the Consultation, ASIC also released a draft of “Regulatory Guide 221: Facilitating electronic financial services disclosure,” which is currently opened for public comment.

The main impact of ASIC’s proposal is that financial service providers would be able to use electronic delivery as the default method of communicating disclosure material to their clients, shifting away from the current method of printed form mail delivery.

ASIC is seeking feedback from within the financial services industry as to ways to improve the current regulatory framework with an electronic disclosure environment.  ASIC is proposing that the current regulatory framework be upgraded primarily through electronic methods, allowing financial service providers to deliver disclosures, such as financial service guides, statements of advice and product disclosure statements electronically as a default.

Under the current regulatory framework, financial service providers must obtain a consumer’s express consent to receiving disclosures electronically, resulting in printed documents and mail delivery remaining the default method for providing disclosure materials.  ASIC’s proposal is driven by findings indicating that an electronic disclosure environment would reduce provider costs and facilitate a better alignment between providers and consumer preferences.

Under ASIC’s proposal, five options are being considered to allow electronic disclosure to become the default method of financial services disclosure:

  • Option 1 – Giving providers an additional option to publish disclosures electronically, with an obligation to notify clients that the disclosure is available;
  • Option 2 – Allowing financial services providers to use a client’s email address to deliver disclosures electronically, without the need to obtain the client’s consent to use that address;
  • Option 3 – Facilitate the use of more innovative product disclosure statements;
  • Option 4 – A combination of Options 1–3; and
  • Option 5 – Maintaining the current regulatory framework.

ASIC is also proposing similar changes to allow electronic disclosure of material required under the credit regime is also being proposed

Overall, ASIC’s proposal is a positive step in updating Australia’s current regulatory framework, that is expected to be welcome by financial service providers and the general public.

Public comments are due by 16 January 2015, with ASIC intending to release an update to the Regulatory Guide 221 sometime in March 2015.

To access the Consultation Paper and draft Regulatory Guide, click here.