New guidance on digital disclosures for financial services consumers

New reforms and a new Regulatory Guide 221 "Facilitating digital financial services disclosure", released by ASIC on Tuesday, aim to make it easier for financial services providers to communicate information to clients digitally.

Prior to these reforms, while many disclosure documents could be provided digitally, the agreement of the client was often required.

As a result of the reforms:

• the default delivery method for product disclosure statements, financial services guides and statements of advice (amongst other documents) can be through digital means; and
• the form and content requirements for these documents have been altered to facilitate the digital delivery of innovative disclosures.

You should consider how you can take advantage of the new digital disclosure measures to save time and printing and mailing costs.

The form of digital disclosures

It means that disclosures may be delivered in full to an electronic address (eg. an email address) if the client provided that address as part of their contact details.

They can also be delivered using any digital method (eg. through the use of a hyperlink in a "publish and notify" approach), provided:

• the client has agreed orally or in writing; or
• disclosure is made available digitally and the client is notified that the disclosure is available, however a client must be given the opportunity to opt-out.

No form of digital delivery is mandated. The reforms are technologically neutral so businesses can decide what best suits their clients and products and will not expose clients to undue risk of scams or fraud.

ASIC Class Order 10/1219 (which facilitated the provision of certain disclosure documents electronically with the agreement of the recipient) has been replaced by the new regime.

The new Regulatory Guide also provides good practice guidance to assist businesses in retaining consumer protections in a digital environment.

How you can move to digital disclosures

Before making disclosures available digitally to existing clients you must gain agreement from the client or send an opt-out notice, in printed or electronic form (using your existing method of communication), of your intention to do so unless the client opts out.

If the client has not opted out within seven days of the notice, you may begin making disclosures available digitally and sending notifications to the client as required. These notifications must include a statement that you have made the relevant disclosure available by digital means and include instructions on how the client can access the relevant disclosure. A notification that is provided at the same time as the opt-out notice will only be taken to have been delivered upon the expiry of the seven-day opt-out period (without the client opting out). The client can also opt out at any time after the seven-day period.

Where you wish to digitally deliver a disclosure document immediately and have not previously sent out a opt-out notice, agreement can be sought to do so. ASIC has made it clear that agreement can be sought in many ways, including orally, in person or by SMS. This approach might be adopted for new clients where, for instance, disclosure needs to be made prior to the provision of the financial service.