There will be a significant move towards simplifying product disclosure laws largely as a result of the Hayne royal commission, says one consultant.
The shift towards simplification of financial services and superannuation law may see greater use of principles-based standards much like prudential standards, said QMV principal consultant for legal and risk Jonathan Steffanoni.
According to him, regulation by way of product disclosure assumes that individuals are:
“Current product disclosure is based on the premise that individuals are at liberty to freely decide what they want, and what’s best for them, and are capable of actually doing that. In reality, this is often not the case,” Mr Steffanoni said.
“Most people simply don’t have the attention or the patience to wade through product disclosure – let alone compare it to alternatives in the context of their personal circumstances.”
Mr Steffanoni said recommendations directed at simplifying the disclosure laws would benefit from considering the increasing reliance people are likely to have on the data economy, which will enable the fast comparison of financial products and allow individuals to consider their financial profile and the product that will best meet their needs.
Further, he believed the Hayne royal commission may consider whether now is the time to recommend the extension of the Consumer Data Right to superannuation products, to require product disclosure in machine readable API format.
“This would enable consumers to utilise smart phone apps and other online services to compare and assess key product features in a familiar and user-friendly manner,” Mr Steffanoni said.
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