ASIC laid the groundwork this week for what could result in some significant changes in advisers’ disclosure obligations.

The groundwork came in the form of a paper produced in partnership with its Dutch counterpart entitled Disclosure: Why it shouldn’t be a default.

The message to come out of the document was clear – disclosure doesn’t work. Further, the regulator, along with providers of financial products and services, need to find better ways to cut through the noise and the BS to engage and communicate when individuals might be unnecessarily putting their capital at risk.

The document dismantles the idea that conflicts can be managed through disclosure, a concept that appears to have built up in the late 1990s, resulting in amendments to the Corporations Act under the Corporate Law Economic Reform Program (CLERP).

Conflicts can’t be managed through disclosure alone – Hayne’s views on this are clear, as is the intent of the statutory Code of Ethics which advisers will soon be obliged to operate under.

ASIC’s paper this week highlights instances where common disclosure practices contradict human behaviours across a range of financial products and services, from loans, credit cards and public market offers to insurance products and financial advice.

Specifically relating to financial advice, the regulator notes the significant shortcomings of statements of advice (SoAs), particularly when it comes to guidance on the quality of an adviser’s recommendation.

The quality and intention of disclosure expected by the regulator has obviously changed quite significantly since CLERP and even in the last year and a half in light of Hayne’s royal commission recommendations and the FASEA framework.

The last time ASIC produced regulatory guidance relating to SoAs was in December 2017, making one wonder whether it’s even relevant in light of the shifts taking place in ideologies and business models.

The regulator describes this latest report as an opportunity to contribute to “frontier public policy discussions” so it’s not clear when or if these views will find their way into formal guidance but I imagine they’ve already piqued the interest of lawyers within a few compliance departments.