Moving with the times: ASIC releases new guidelines on disclosure for financial services

On 28 July 2015, ASIC released a new regulatory guide to financial service providers in an attempt to streamline the disclosure of information to consumers through digital channels.

The new Regulatory Guide 221 - Facilitating online financial services disclosures (RG 221) can be found here.

What’s changed?

Under the previous scheme (ASIC Class Order 10/1219), the relevant client’s agreement was required before disclosure documents could be provided digitally.  The regime set out in RG 221 replaces the ASIC Class Order and allows for the default delivery method for product disclosure statements, financial services guides and statements of advice (amongst other documents) through digital means (that is, if an electronic address was provided by the client, then the financial services provider does not need the clients agreement to send disclosure documents to that electronic address).

In the press release for the new RG 221, ASIC Commissioner John Price said, “The measures announced today respond to changing consumer preferences, with ever increasing numbers of people transacting digitally…[T]he changes mean product disclosure statements (PDS) and other financial services disclosure documents will be delivered to consumers digitally as the default option, unless the consumer opts out.  This will reduce the costs of printing and mailing for businesses while preserving choice for those consumers who wish to receive paper.”

The following “quick guide” on how disclosure documents can be delivered is contained in RG 221:  

Delivery of disclosure in full to an electronic address

Delivery of disclosure using other digital delivery methods

Disclosures may be delivered digitally in full to an electronic address (e.g. an email address):

  • if the client has provided an email address (or other electronic address) as part of their contact details; or
  • for superannuation fund trustees, the trustee can rely on ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647 for disclosures to “default members” (i.e. where the member’s email address has been provided by the member’s employer).

 

Disclosures may be delivered using any digital method (e.g. a digital message with a hyperlink to the disclosure):

  • if the client has agreed (orally or in writing);
  • if the client has not agreed, the provider can rely on ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647, which involves making the disclosure available digitally and notifying the client that the disclosure is available (the provider must first give the client the opportunity to opt out of this method); or
  • If it is specifically permitted by the Corporations Act (e.g. for annual superannuation information and confirmations of transactions).

Lavan Legal comment

The new regime for the disclosure of information through digital means is a real practical change.  Financial services providers should consider how they can take advantage of the new RG 221 because the potential time and cost savings (in terms of printing and postage) could be substantial.