Submission to ASIC on Facilitating Electronic Financial Services Disclosures

Financial Rights responded to ASIC’s Consultation Paper regarding electronic disclosures by overall supporting the its proposals. Our submission outlined several specific concerns and made one over-arching proviso: that the overall result of any changes is to improve consumer understanding of the benefits and limitations of the financial products and services they are in investing in.

Recent ASIC research has shown that a majority of consumers of insurance do not read their product disclosure statements, or if they do, they do not understand all important information being disclosed.  Our submission to ASIC emphasised that if ASIC is going to allow financial services providers to use a greater range of electronic methods to deliver disclosure information, those method needs to be tested to ensure that they are enhancing consumer understanding, not making it worse.

The proposals within this Discussion Paper have the potential to save industry significant sums in printing and postage of disclosure documents. We submit that some of the resources freed up in this way must be redirected to improving consumer understanding of the products they are purchasing. Financial Service Providers must take some responsibility for testing whether their customers receive and comprehend vital disclosure information.

Specific Concerns:

• We opposed changing the default setting to electronic disclosure. Consumers should be given a choice about their preferred method of communication.
  • Consumers should not be sent all important notices and disclosures electronically simply because they gave the FSP their email at some point, they should be asked to give specific consent to receive notices electronically.
  • There are privacy and reliability problems with email disclosure. o Too many disadvantaged groups still don’t have reliable access to email.
• Consumers should not be charged for opting to receive paper copies of legally mandated disclosure.
• Critical notices like direct debit failures or insurance renewals should require a response if sent electronically, and if no response is received, alternate methods of communication should be attempted (postal notice, phone call, SMS)
• We are strongly opposed to any marketing material being included with or linked to mandated disclosure material.