While electronic disclosure (e.g. for FSGs, PDSs, periodic statements) has always been possible under the Corporations Act, unclear drafting in the Act has meant there has been question marks around some of the requirements.
For example, for years it has not been clear whether express consent was required for a client to receive a document electronically where the client has not nominated the delivery method.
Now, in ASIC’s revised RG 221, released on 28 July 2015, the regulator has indicated that it is taking a practical, common sense approach to the electronic disclosure requirements. It states that in most cases, financial service providers will be able to infer consent from a client to receive disclosure documents electronically where the client has provided, for example, an email address but did not provide the address for the express purpose of receiving disclosure.
An example of this practical approach from ASIC is its guidance on using a ‘publish and notify’ approach. i.e. ASIC has provided relief in a new regulatory Instrument, 2015/647, which makes it legally acceptable to make disclosures available electronically and notify a client the disclosure is available without the need for the client to have agreed to receive the disclosure in that way.
The Regulatory Guide also contains an 8-point best practice guide. The 8 guidance principles are:
- disclosure documents should be easy to retrieve, view and understand;
- disclosures should not distract or divert clients from relevant information;
- clients should be able to identify the disclosure;
- providers should use their reasonable efforts to ensure a client (or their agent) receives a copy of the disclosure;
- clients should be able to keep a copy so they can access the disclosure later;
- clients should be able to prove which version of disclosure they relied on;
- clients should be able to opt out of digital disclosure;
- disclosure documents should be delivered in a way that does not unnecessarily expose clients to security risks (e.g. phishing or identity theft).
The revised RG 221 was drafted after public consultation (see CP 224). Overall, it is another small reduction in red tape for those in financial services. If you want clarification on any of the requirements and how they apply to your business, please contact imac legal & compliance.