Who really reads the fine print? Fintechs welcome ASIC’s hands-on approach to dodgy finance
The fintech industry has welcomed a new report from the corporate regulator that finds reliance on mandatory product disclosure in the financial services sector has gone too far, as companies prepare for a shift in the watchdog’s focus.
The Australian Securities and Investments Commission (ASIC) yesterday said it won’t hesitate to use new product intervention powers to secure better outcomes for consumers of financial services products.
After being dragged over the coals during the banking royal commission for its approach to regulating the financial services sector, the regulator has admitted there’s been too much emphasis on firms telling consumers about their products.
In a new report released yesterday afternoon, prepared in partnership with Dutch financial markets regulator AFM, the corporate watchdog laid out the case against an over-reliance on disclosure, saying companies need to do a better job with product design and distribution.
Basically, research has routinely shown that even those consumers who do read the fine print and other warnings aren’t necessarily in a position to make informed decisions.
Companies know this, and in many cases, actively take steps to make the problem worse because there’s a financial incentive in complexity.
ASIC’s not a fan of this type of behaviour and wants businesses to develop simpler products that can be more easily communicated to customers and better meet their needs.
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