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The Financial System Inquiry Interim Report notes that the current disclosure regime for retail financial products and services is not always effective in meeting its objective. It produces complex and lengthy documents that often do not improve customer understanding and impose costs on financial service providers.[1]

ANZ Bank and the Consumer Action Law Centre have jointly prepared this paper to provide additional information and to help advance thinking on options for improving the current consumer disclosure regime.

It is recommended that the Inquiry accord priority to electronic delivery of existing product disclosure information, with appropriate safeguards for those that lack access to electronic communication.

Improved disclosure requires greater use of plain English drafting and key fact sheets or short form disclosure for basic retail banking products and credit products.

Good disclosure is comprehensible and simple, presents the most important information prominently, includes product warnings, is comparable, and is based on an understanding of how ordinary people use disclosure documents and make decisions.

Sharing information with customers about how they have used financial products in the past can help address people’s overconfidence in their ability to make good and accurate decisions.

A layered approach to consumer disclosure is also favoured to address different customer needs and levels of understanding. This will be slower to implement and should be fully tested with consumers before being introduced across the financial system.

Behavioural Economics offers insights into improving disclosure for consumers. Some of these insights are already informing how organisations, including ANZ, present information to improve customers’ understanding of financial products.

It is also recognised that disclosure is not always the best approach to addressing consumer concerns.

An option is to move from sole reliance on disclosure of information towards a system, such as the UK’s Money Advice Service, where free consumer guidance is provided and tools are made available to assist with financial decision making.