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Empowering consumers to make educated decisions

Empowering consumers to make educated decisions

July 16, 2014 2:42 PM | Posted by Richard Batten | Print this page

An area of real concern raised in the Interim Report is about the effectiveness of disclosure in enabling consumers to make decisions. The report indicates that the current disclosure regime is not effectively serving consumers.

It's clear that the shorter PDS regime has not worked, and disclosure documents are still perceived as too complex or not useful. The Inquiry's preparedness to reconsider the role and nature of the retail disclosure regime is therefore welcome.

The Inquiry is also seeking guidance on the extent to which product suitability requirements should be imposed on issuers similar to the credit regime. Alternatively, do we require a UK-style regime to enable ASIC to prevent certain types of products being be offered to certain consumers?

I would be very concerned to see a paternalistic approach to financial product availability being introduced in Australia. One of Australia's strengths is our system of principles-based, non-prescriptive regulation. This kind of regulation could have a negative impact on product innovation and availability to meet consumer needs.

Government and regulators are not necessarily best placed to identify what products consumers should or should not have. A ‘one size fits all approach’ does not recognise that consumers have different needs, experience and capability. A better approach would be to focus on how higher risk products are distributed rather than simply restricting access to particular types of products.

These are just some of the important regulatory considerations raised in the Interim Report. Overall, we welcome its comprehensive nature, and look forward to preparing further responses on key matters raised in our next submission.

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