In a speech on Wednesday, Mr Price said disclosure is more effective if information is presented in a way that is more useful to investors and financial consumers.
“We have all witnessed the harm caused by assumptions that all investors and financial consumers will always act rationally, for example; our experience shows that disclosure is not the disinfectant it was once thought to be,” Mr Price said.
The comments echo ASIC deputy chair Peter Kell’s comments in May about the inadequacy of the regulator’s reliance on disclosure.
“To that end, in submissions to the [FSI] we have suggested that the effectiveness of disclosure may be enhanced by combining disclosure with tools that help investors better understand financial products,” he said.
Mr Price also said one way to enhance disclosure may be through providing information to investors in layers so they can access the various chunks of information at a point when it is “most meaningful to their decision making”.
ASIC acknowledges there are advantages and disadvantages to the industry’s self-regulating compared to regulation by a government body, he claimed.
“[The industry may] have a greater knowledge of the conduct of industry participants, be able to respond to emerging regulatory problems in a timely manner and be in a position to more efficiently allocate the cost of regulation,” Mr Price said.
“However, self-regulation and co-regulation models also have limitations. For example, these models may lack credibility and public confidence, lack effective enforceability or be anti-competitive by creating barriers to entry.”
