Facilitating Digitalfinancial Services Disclosures

REGULATION IMPACT STATEMENT

Facilitating digitalfinancial services disclosures

July2015

About thisRegulation ImpactStatement

ThisRegulationImpactStatement(RIS)addressesASIC’sproposalsforfurtherfacilitatingdigitaldisclosureby:

providingrelieftofacilitatedefaultdigitaldeliveryoffinancialservicesdisclosuresandmoreinnovativeProductDisclosureStatements(PDSs),FinancialServicesGuides(FSGs)andStatementsofAdvice(SOAs);and

updatingourregulatoryguidance.

What this RegulationImpact Statement isabout

1This Regulation ImpactStatement(RIS)addresses ASIC’s proposalsfor facilitatingdigitaldisclosure byprovidingreliefto facilitate defaultdigital deliveryoffinancialservices disclosuresandto remove barrierstotheuse of innovative ProductDisclosure Statements (PDSs), FinancialServices Guides (FSGs)and Statements ofAdvice (SOAs),as wellasupdatingourregulatory guidanceto reflectthis.

2In developingourfinalposition,we have considered the regulatoryand financialimpactofourproposals. We are aimingto strike an appropriate balance between:

administeringthelaweffectivelyand with minimalprocedural requirements(reducingredtape);and

promotinginvestortrustand confidenceinthefinancialsystem.

3This RISsets outourassessmentof theregulatoryandfinancialimpactsof ourproposed policyand ourachievementofthis balance. Itdeals with:

thelikelycompliance costs;

thelikelyeffectoncompetition;and

other impacts, costsand benefits.

Contents

AIntroduction...... 4

Background...... 4

Assessingthe problem...... 7

WhyisASIC action needed...... 9

BOptionsandimpactanalysis...... 11

Option1:Combinedmeasurestoremovebarrierstodigital

disclosure(preferredoption)...... 11

Option2:Enabledefaultdigitaldeliveryoffinancialservices

disclosures...... 13

Option3:RemovebarrierstomoreinnovativePDSs,SOAsand

FSGs...... 18

Option4:Takenoaction(statusquo)...... 19

CConsultation...... 21

DConclusionandrecommendedoption...... 23

EImplementationandreview...... 24

FRegulatoryBurdenandCostOffset(RBCO)Estimatetable...... 25

AIntroduction

BBackground

4Akeypartofthe legislative scheme governingfinancialproducts and services is the principle ofdisclosure.Thatis,in orderforconsumersto be in a positionto make informed decisions about financialproductsand services, the providers of those productsand services mustgive themallofthe relevantinformation aboutthoseproducts orservices,such as theirkey features, benefits and risks.

5Theprovision ofthis information is mandated bythe legislation (as modified bythe regulationsand existingASICinstruments).Thevarious provisions coverboth:

(a)upfrontdisclosure—the informationthatmustbe given atthe beginning orbefore the purchase orenteringa financialrelationship, such as a PDSs;and

(b)ongoingdisclosure—theinformationthatis given duringthe course of ownership ofthe productorengagementwiththeservice, such asa bankstatementorannualsuperannuationupdate, oranotification ofa change totheproductorservice.

6TheCorporationsAct2001(Corporations Act)itselfisgenerallyneutralas to the formof thedisclosure for financialservices—thatis, thelegislation does notpreferenceoneformfordisclosure(such asprinted documents) overanotherform(such asdigitaldocuments),aslongas the informationis providedtothe consumerata mandated pointin time, meets content requirements, and,insome cases, meets overarchingrequirements, such as being‘clear, concise and effective’.

7However, as detailedbelow, theimpactof the current legislative requirements, combined with ASIC’s currentguidanceon howtoapply thoserequirements setout in RegulatoryGuide 221 Facilitating online financialservices disclosures (RG221), mean thatthedefaultmethod for deliveryofmostdisclosures isin printedform(eithergiven personallyor sentbypostto anaddress).In otherwords,a printed disclosure document, sentto apostaladdress, remains the defaultmethod ofdeliveringfinancial services disclosures.

8Providers are also generallyableto deliverupfrontdisclosures electronically, butwhile electronicversions ofupfrontdisclosures are routinelymade available,these are generallystatic, PDFduplicatesofa printeddocument.

Legislativebackground

9While mostdisclosurescanbe delivered digitallyusinga varietyofdelivery methods, this generallyrequires specific agreementfromthe client,as compared with deliveringdisclosureto apostaladdress, which does not requirespecificagreement.

10Theproposals discussed inthis RISrelate to Pts 7.6–7.9 ofthe Corporations Act, which permita wide range offinancialservices disclosures tobe delivered digitally.The provisionsthatenable disclosuresto bedelivered digitallydifferdependingon thetype ofdisclosure.This RISdoes not address disclosures under the NationalConsumer CreditProtection Act 2009, such ascreditcardstatements ormortgage disclosures.

11FSGs, SOAs, PDSs andinformation statementsforCommonwealth GovernmentSecurities(CGS)depositoryinterestscanbe ‘given’iftheyare sentto an electronicaddress orfax number‘nominated’bythe clientorthe client’sagent:s940C(1)(a)(ii), 1015C(1)(a)(ii)and1020AK(1)(a)(ii).The term‘nominated’isinterpretedin RG221asa requirementforexpress consent,in the case ofelectronic addresses.

12Thefollowingdisclosuresmaybe notified orgiven toa clientin ‘electronic’ formormaybe sent‘electronically’(interpreted inRG221 asrequiring express consent):

(a)ongoingdisclosure (s1017B(3)(b));

(b)periodic statements (s1017D(6)(b));

(c)confirmations oftransactions (s1017F(6)(a)(ii));

(d)annualsuperannuation information (s1017DA(3)and reg7.9.75A(3)(b));

(e)additionalinformation provided bya superannuationtrustee (s1017DA(3)and reg7.9.75A(3)(b));and

(f)unsolicited offersto purchase financialproductsoff-market (s1019E(1)), 1019G(3)and1019J(2)).

13Thefollowingdisclosuresmayalternativelybe ‘madeavailablein anyway agreed to’bya clientortheiragent(meaning, providedthe clientagrees, the disclosurecould bedelivered digitally):

(a)FSGs and SOAs (s940C(1)(a)(iii));

(b)PDSs (reg7.9.02A);

(c)ongoingdisclosure (reg7.9.75A(1));

(d)periodic statements (reg7.9.75A(2));

(e)annualsuperannuation information and additionalinformation provided bya superannuation trustee(reg7.9.75A(3)(c)and(d));and

(f)additionalinformation onrequest(s1017A(4)(b)).

14Annualsuperannuationinformation can also be provided to members ofa regulated superannuationfund by‘making[it]availableon a website thatis maintained byoron behalfof the trustee’in accordance withreg7.9.75BA.

15Confirmationsoftransactions canbe provided‘bymeans ofa standing facility’in accordance withs1017F(5)(b)and 1017F(5A).

16UnderClass Order[CO13/763]Investor directedportfolioservices, quarterlyreports foraninvestordirected portfolio service(IDPS)can either be delivered electronically, ora client(withtheirconsent)can be given accessto theiraccounton an electronic platform, wherethe Australian financialservices(AFS)licenseehasno reason todoubt thattheclienthas substantiallycontinuousaccess.

ASIC guidance

17In 2010, ASICissued RG221. The purpose of the guide was to facilitatethe use ofelectronic deliveryofdisclosure byexplaining howthe delivery methods inthelawoperate.ASICalso made Class Order[CO10/1219] Facilitating online deliveryofPDSs, FSGs and SOAs to enable deliveryof some disclosures viahyperlinks andthrough referencesto website addresses, and toexplain whenconsent isneededto send disclosures electronically.

18Underthe currentlawandASIC’s currentguidance, providers are ableto delivermostongoingdisclosures bypublishingthemelectronically(such as on a website)and givinga notification;however, generallythe providermust firstagreethis method ofdeliverywith the consumer.

19As a resultof the positionthatwetookin ourguidance, even where providers have anelectronic address, theymustgenerallyobtainactive consentfromconsumers inorder tosenddisclosurestoelectronic addresses. As such,thedefaultmethod ofdisclosureis printed disclosures sentto a postaladdress.

Summaryofindustry

20These proposals mayaffectallproductandservice providersin the financial sector;however,the keysectors thatprovidedisclosure documentsare superannuation fundsand banks (includingwealth managementbusinesses ofbanks).

21Accordingto Australian PrudentialRegulation Authority(APRA)data,there are approximately29 millionsuperannuation memberaccounts withfunds thathave more than fourmembers. Weestimate thatthere areapproximately 40million bankcustomersin Australia.1

Figure estimatedbyASICfromdataincludingindustrysubmissions,and bank annualreports andwebsites.

Assessing theproblem

22Theoverarchingdisclosureframeworkhas significantshortcomings and limitations,includingthat,even when welldesigned,disclosureis ultimately lesseffective in addressingsomemarketproblems thanothers(e.g. conflicts of interest).2

23Thepolicyprojectoutlinedin this RISis notattemptingto addressthese broaderproblems, nordoesitseekto assess and improve the efficacyofthe disclosureregime.

24Rather, this RISis intendedto address problems withinthis regime, around theformatandthe methodofdeliveryofdisclosurethatareinhibitingthe regime fromoperatingefficiently, inthat the regime does notallow participantstochoose themostappropriate,effectiveorefficientmethodof communication.

25These problems arechieflyregulatoryimpediments to technologyneutral communication within the financialservices disclosureregime.

26Ourestimates,based oninformation provided byindustry, suggest thatonly around34%ofbankcustomers and around 8%ofsuperannuation members currentlyreceive financialservicesdisclosures digitally, includingbyemail and otherdigitalmethods.

27Ifeach ofthe remainingconsumers received asingle lettera yearfromtheir financialservices provider,thatwouldbe around 55 millionletters each year.

Regulatorysettingsunnecessarilylimiting choice

28Thecurrentregulatoryandlegislative settings create adisclosureregime for financialservicesthatis nottechnologyneutralbut,rather,favoursprinted disclosureformatsand posted orpersonaldeliveryoverdigitalformatsand digitaldeliverybymaking printedand posted disclosuresthe default.These regulatorysettings create marketinefficiency, intheformofadditional transaction costs, because providers cannotchoose to settheirdefault method ofdeliveryto digitaldelivery. Thismeans thatconsumers needto activelyoptin toreceive digitaldisclosures.

29Research suggests thatadefault option thatwillberetained unlessthe consumer activelychoosessomethingelse (i.e.‘optsin’)results inmore people choosingthe defaultthan would be the caseifno defaultwere set. In addition tothis, behaviouralresearchalso suggeststhatdefaults can be ‘sticky’, meaningthatoncethe choice is set,even whenconsumers preferor

2FinancialSystemInquiry,Financial System Inquiry: Interim report,July2014(Financial SystemInquiryinterimreport), pp.3-54–3-62,

wouldacceptanalternative, behaviouralbiasescanlead toinertia or retainingthestatus quo, meaningconsumers mightnotactivelyseekto changedisclosure preferences.3

30At the time [CO10/1219]was developed (2010), the regulatorydistortionin favourofprinted and posted disclosure wasjustified on the grounds of consumerprotection—thatis, ensuringthatconsumers,forwhomatthat time digitalcommunications mayhave been arelativelynewphenomenon, were onlycontacted digitallywhere theyactivelysoughtdigital communications.

31Theseregulatorysettings fordisclosure nolongeraccommodate provider and consumerexpectationsin the currentenvironmentwherethe majorityof adultAustraliansareonline(92%)and a majorityofthose online undertake financialtransactions usingtheinternet(72%).4

32Theincreaseduseofdigitalcommunications(inparticular, the internet)both in terms ofpercentage ofpopulation, and frequencyofonline engagement, mean thattheregulatorybenefitfora smallnumberofconsumers nolonger justifies the imposition ofadditionalregulatoryburdenon providersand consumersto engage digitally.

33In additiontothis, whilethe Corporations Actenvisages the use ofelectronic addresses, itis draftedina waythathas notkeptup with the varietyand breadth ofdigitalcommunications.This means providers areprevented or discouragedfromusingthemostefficientandeffectiveformof communication.

34Furthertothis, the FinancialSystemInquirynotesthat,‘where changes in technologycreate difficulties ininterpretingprovisions, firms arelikelyto take a conservative viewtominimiseregulatorycompliancerisks’.5This means thateven where the lawallows digitaldelivery, in some cases providers are stilldiscouraged fromusingdigitalmethods andformats dueto a lackofclarity.

Regulatorysettingsinhibiting innovation

35Theregulatorysettings thatfavourprintedand posteddisclosurearealso a barrierto innovation, through the useofdigitaltechnology, in disclosure. Thesesettings preventproviders fromsupplyingdisclosureintheforms that are demanded byconsumers orthatproviderschoose to supply, such as interactive web-based disclosures, apps, videos, games and audio presentations.

3C Sunstein(2011),‘Empiricallyinformedregulation’,Universityof ChicagoLawReview,vol.78, pp.1349–1429. 4AustralianCommunications andMediaAuthority(ACMA), Communications report2013–14series: Report1— Australians’digitallives,March2015,

5FinancialSystemInquiryinterimreport,p.4-42.

36Thecurrentregulatorysettings are inhibitingpossibilitiesforprovidersto explore new ways ofcommunicatingand therefore forconsumersto potentiallybenefit fromthese opportunities.

37We expect thattheremoval ofbarriers to more innovative disclosure will resultin more of these more innovative disclosuresinthe market. Wethink that technologyprovides opportunities to betterengage orcommunicate with some consumers. As such,we hopethatsome additionalconsumer engagementandunderstandingwillflowfromthe removalofbarriers to this kind ofdisclosure.

38TheFinancialSystemInquiryfinalreportnotedthat‘consumers canmore effectivelyuseinformationthat isaccessible, engaging and understandable. Although there hasbeenlimited research onthebenefitsofnewmedia compared with paper-baseddisclosure,newmedia offers opportunitiesfor moreengagingcommunication.’6

WhyisASIC action needed?

39Althoughintendedto facilitateelectronic communication,7thelegislation, regulations and ASIC’s currentguidance have notkeptup with consumer and industrydemand and are impedingtheefficientoperationofthe market.

40ASICactionis needed toremove the regulatorybarriers to digitaldisclosure described above.

41TheGovernment’sred-tapereduction and digitaleconomypolicies mean that thereisa focus on whatASICis doingto supportdigitalcommerce and to reduce red tape.

42This proposalwillsupport the goals ofboth of thesepoliciesbyremoving unnecessaryredtape—inthis case,consumersno longerneedingto‘opt in’ to digitaldeliveryand bysupportingdigitalcommercebyincreasingthe use ofdigitalcommunications in financialservices.

43Recentgovernment inquiries also supportthe facilitation ofmore digital communication. Forexample,the Commission ofAuditreport8made a recommendationthat the Governmentsetan ambitiouse-government strategy, including making engagementwiththe Governmentelectronic by default.The 2015–16 Budgetbuiltonthis bysettingup a new Digital Transformation Office. Whiletheproposals discussedin this RISdo notgo

6FinancialSystemInquiry,Financial System Inquiry: Final report,November 2014(FinancialSystemInquiryfinal report),

7CorporateLawEconomic ReformProgramBill 1998,ExplanatoryMemorandum, paras 8.10–8.17;RG221.1.

8National Commission ofAudit,Towardsresponsiblegovernment: The report oftheNational Commissionof Audit—Phase one,

directlyto digitalengagementwith Government, byfurtherfacilitating digitalcommerce, theywillcomplement the DigitalTransformation Agenda.

44TheFinancialSystemInquiryfinalreportalso made tworecommendations relevantto electroniccommunications.Theserecommendationsare:

(a)Facilitate innovative disclosure:remove regulatoryimpedimentsto innovative productdisclosure and communication withconsumers, and improve the wayrisks and fees arecommunicated toconsumers.The firstpartof thisrecommendation was directed specificallyatASIC, withthesecond part,a legislative solution,to beimplemented following evaluation ofthe success ofASICmeasures.

(b)Technologyneutrality:identify, in consultation with the financial sector,and amend priorityareas ofregulation to betechnologyneutral. Embed consideration oftheprinciple oftechnologyneutralityinto developmentprocessesforfutureregulation. Ensureregulation allows individuals toselectalternative methodsto access servicesto maintain fairtreatmentforallconsumersegments.This was ageneral recommendationto Government, notspecificallydirected atASIC.

45Ourproposals willsupportthetechnologyneutralityrecommendation by seekingto align the treatmentofdigitaland printedandpostalmethods of communications. In addition, ourproposals will,byremovingbarriersthat limitthe formofdisclosure, remove impediments to innovative product disclosureand communication.

46Ourproposals willenableproviders todeliverongoingdisclosures digitally as a default.This willmeanthatmore consumers are likelyto receive disclosures digitally. Thiswillsave moneyand time forprovidersand be more convenientfora majorityofconsumers. Itmayalso improve engagementwiththecontentofthedisclosures. Forthose consumers who preferprinted andposted disclosures,these proposalsensurethatchoice remains available.

47These proposals are proactive and designed tolead tomore positive outcomes andcompliance costsavings.

48It is important tonote thatGovernmentaction to remove barriers alone will notnecessarilydeliverthebenefits ofmore digitaldisclosurebecausethere are other, non-regulatorybarriers toincreaseduse ofdigitalchannels.

49Thisis particularlythe caseformoreinnovative productdisclosure, where costs andconsumerdemand forinnovative disclosureare afactorin the incentives forproviderstodevelop more innovative disclosure solutions. Nevertheless, itis important thatregulatoryrequirements are nota factorin holdingbackthe potentialdevelopmentofdisclosurethatbettermeets providerandconsumerneeds, where theserequirements donototherwise have regulatorybenefit.

COptions andimpactanalysis

We considerthatthe options are:

Option1—AcombinationofOptions2 and3 (preferred option)

Option2—Enable defaultdigitaldeliveryoffinancial servicesdisclosure

Option3—Remove barriersto more innovative PDS, SOAs and FSGs

Option4—Make no changes to ourguidanceand provide no additional relief, therebymaintainingthe status quo.

Option 1:Combined measurestoremovebarriersto digital disclosure(preferred option)

50This option combines Options 2 and 3 detailed belowand delivers maximum benefits forconsumers andfinancialservice and productproviders by removingall legaland regulatorybarriersthatare preventingtechnology neutrality(preferringprinted disclosure)forfinancialservice and product disclosurethatwe areable to remove—thatis,removinglegaland legislative barriersto both:

(a)enable defaultdeliveryofdigitaldisclosure(i.e. a proposalabout deliveryofdisclosure);and

(b)allowformore innovative forms ofPDSs, FSGs and SOAs (i.e.a proposalabout the formofdisclosure).

51While mostcompliancecostsavings are mostlikelytobe realised asa result of implementingOption 2,combiningOptions 2 and 3is designedto achieve a technologyneutralapproach to boththedeliveryandformoffinancial services disclosure. Achievinga technologyneutralapproach with respectto the deliveryonlywould notaddressexistingbarriersthatareinhibiting innovation in disclosure.

52Deliveringthese twosets ofchanges togetheralso sends a strongermessage aboutASIC’s commitment to digitaldisclosurethaneitherone ofthese alone.

53On technologyneutrality, the FinancialSystemInquiryfinalreport(p. 270) notedthefollowing:

Atechnology-neutral approachtoregulationenables regulators andgovernment to adapt toinnovativedevelopments andmanagerisks.It canalsoreduce compliance costs byremovingunnecessaryregulatoryimpediments andimprovingthe stabilityand longevityofregulation.Itcanalsogivefinancial product providersgreaterflexibilityto innovatetomeet changing consumer expectations.

54Takingstepsto furtherfacilitate digitaldeliveryofdisclosures,as wellas more innovative documents, willresultin more digitaland less paper distributionand willreducecosts forbusiness,increaseconveniencefor consumers and mayresult in increasedconsumerengagementwithand understandingofdisclosure.

55In some cases, defaultdigitaldisclosure mightresultinsome consumers not receivingdisclosures. Asthe FinancialSystemInquiryfinalreport

(page 270)pointsout:

Stakeholders noteapotential consequenceoftechnology-neutral regulationis thatit risks excluding some communitysegments fromthefinancial system.For example, by enablingbusinesses toshift toelectronic servicedeliveryas adefault, older Australians or others withlimitedinternetaccessmaybecome excluded.As aresult,itis important that regulationaccommodates the abilityofconsumers toselect alternativemethods to access services,suchas paper-based delivery.

56In ourconsultations, consumergroups alsoraised concernsabout the impact ofourproposals on vulnerable and lessdigitallyconnected Australians.

57Where possible, we have builtinto ourproposals protectionsforthese vulnerableconsumersand included guidanceto help providersreach their clients, without imposing disproportionate additionalcostson those providers. For the newdefaultmethodofdelivery, we requirethatproviders give consumers a clearopportunityto optoutofdigitaldelivery, unless they have acquireda fullydigitalproductorservice.This opt-outfroma default retains fullchoiceforconsumers.

58In addition, we have given guidanceto providers regardingemailbounce- backs. As a matterofgood practice, providers shouldmonitorfor undeliveredorundeliverable emails and tryan alternativemethod of delivery. We also encourage providersto use a methodand formofdelivery thatbestsuitstheirclientaspartoftheirobligation to provide clear, concise and effective disclosure.

59On the otherhand, we alsoexpectincreased digitaldisclosuretoresultin some consumers, who mightnotreceive orengage with a paperdisclosure (underthe currentregime),to be more ableorinclinedto doso with a digital disclosure.Whilesome consumers maychange emailaddressesfrequently, others, such as renters, may move postaladdressesfrequentlybutretain emailaddressesforlongerperiods. Some consumersmaynothave internet access ormaynotseekto engage with digitaldisclosures, whilesome others maybemore inclinedto engage with a disclosure thattheycanreadily access froma mobile device.

60It is important tonote that these proposals buildon whatis alreadyallowed underthelegislation interms ofdigitaldisclosure—mostdisclosures may alreadybe sentdigitallyand in some cases byusinga standingfacility, such as a website.

61Ouraimis notto address the shortcomings associatedwith disclosure more broadly. As such, we are not intendingtoimpose additionalobligations on providers usingdigitalformats thattheywould notberequired tomeet if theywere deliveringprinted disclosures.

62This means, as with postaladdresses, the onus remainson theconsumer to update theircontactdetails(suchasemailaddresses)iftheychange and, once given ormade available,the consumeris freetoread ornotread the disclosureastheyseefit.Thisis critical totheprinciple oftechnology neutrality.

63Although we hope thatthiswork mightmake disclosure more engagingand accessibleforsome, andfree up resources toinvest in betterdisclosure, our focusisnotspecificallyon deliveryformas a means toincrease engagement with disclosure,butratherwe are workingto openupthe possibilityof increased engagement throughnewformats.

64This workis also notintended toremedyexistingrisks associated with digitalcommunications,includingsecurityandtechnologyconcerns. Nevertheless, we acknowledge thatin an environmentofmore digital disclosure,theserisks may affectmoreconsumers, which is whywe also propose updated guidance to mitigate these risks.

65Specific impacts have beendetailed undereachoption.

Option 2: Enabledefaultdigitaldeliveryoffinancialservices disclosures

66This option has twocomplementarycomponents. It:

(a)gives providersan additionaloption fordeliveryofdisclosures, which would enable themto meet therequirements ofdeliveryif theypublish disclosures digitallyand then notifythe clientthatthedisclosureis available;and

(b)makesitclearthat ifafinancialservices providerhas an electronic addressfora client,theydonotneed additionalconsent tousethat addressto deliverdisclosures.

67Together,these components ensurethatproviders willbe able to setthe defaultfor theirdisclosuresas digitalif theychoosetodo so, as longas the consumerhasthe opportunityto optoutofdigitaldisclosure(exceptforfully digitalproducts).

Impact on industry

68Byremovingthe currentregulatorybarriers thatrequire additionalsteps before disclosures canbe delivered digitally(compared withpostaldelivery) we expectmore consumersto receive disclosures digitally.Weexpect Option2 willresultinsignificantcompliance costsavings forindustry.

69Thesuperannuationand bankingsectors are responsible fora majorityof financialservicesand productdistributionand were able to provide costing information.Thesesectorsare also bestplaced to takeadvantage ofgreater digitaldisclosure opportunities. Additionalsavings mightbe realisedbynon- bankwealth managementand financialservices (suchas advice)providers.

70Based oninformation provided inthecourseofconsultations, weestimate that, forbankingcustomers, around 34%ofcustomersare currently receivingcommunicationsdigitally. Forsuperannuation we estimate approximately8%ofmembersarecurrentlyreceivingcommunications digitally.

71Based onindustryfeedbackand ouranalysis, we estimatethatthe compliancecostsavings willbe around $299.1 millionperannumover 10 yearsforthesuperannuationand bankingsectors.This willprimarily

resultfromsavings in printingand postage costs, butalso incorporates time and delaysavings forbusinesses, as wellasrecord-keepingsavings thatwe estimate will accrueto businesses.

72Table1 showsthetotalcostsavings to industry, basedon an assumed 80% take up ofdigitaldisclosure. Thisassumption is basedon OBPRadvice on consumerpreferencesfordigitalengagementwith government, ACMA figuresfor internetuse (92%), use ofthe internetforonline bankingand payingbills (77%ofinternetusers),9and consumers who report thatthey expect to dealwith business and government servicesonline (82%).10

Table1: Totalcostsavingstobusiness

SectorCost savings

Banking$214,155,997

Superannuation$75,738,307

Total$289,894,304

ource:ASIC,industry response to ConsultationPaper 224 Facilitating electronicfinancial services disclosures (CP 224),APRAdata,ReserveBank ofAustralia (RBA) data andAustralia Post.

9ACMA,Communications report2013–14,

10ACMA,Communications report2011–12,

73Table2,Table 3andTable4 showthe assumptions underlyingthe above costestimates.There are additionalsavings fromthe wealth management operations ofbanks, beinga totalofapproximately$69 milliona year. Additionaldetails have notbeenincludeddueto commercialsensitivity.

Table2:Maximumsavingsestimates—Printingandpostagecosts

Small / Large / Cost of / Cost of / Total / Annual cost / Assuming digital
letters / letters / small / large / numberof / of paper / disclosurescost
per year / per year / letter / letter / accounts / disclosure (total) / 5%, maximum annualcost savingsare estimated at:
Banking— transaction / 6 / 1 / $1.32 / $2.53 / 40,345,982 / $421,060,755 / $400,007,717
accounts
Banking— wealth / n/a / n/a / n/a / n/a / n/a / $68,998,734 / $65,548,797
management
Superannuation / 1 / 1 / $1.32 / $2.53 / 28,794,934 / $110,728,519 / $105,192,093

Source:ASIC,industry response to CP224,APRA,RBA andAustralia Post.

Table3:Savingsestimates—Banking

46%11

$465,556,514

$214,155,997

Source:ASIC,industry response to CP224,APRA,RBA andAustralia Post.

Table4:Savingsestimates—Superannuation

72%12

$105,192,093

$75,738,307

Source:ASIC,industry response to CP224,APRA andAustraliaPost.

74Thesecompliance costsavings are estimates onlyandare providedto give an indication ofexpected compliancecostsavings.Theyare highly

11Assuming80%total take-up,less 34%ofconsumers alreadydigitally engaged.

12Assuming80%total take-up,less 8%ofconsumers alreadydigitallyengaged.

dependenton assumptions,which have been made withinputfromindustry participants,butnevertheless remain ourassumptions.

75Consultationsuggests that,in manycases, providers willrelyonlyon greater use ofexistingsystems. Wealsounderstandfromourconsultationsthatany additionalcosts would beminor. Consequently, this compliancecostsavings estimate does not incorporate a value forcosts requiredto implement systems changes forproviders.

Impact on consumers

76Theimpacton consumerswillbe minimal becausethese proposals do not change the existingrange ofpossible deliverymethods, butmerelymake it possible fordigitaldisclosure to bethe defaultmethodofdelivery. Except forfullydigitalproducts, whichincludeas partoftheirterms andconditions that theyarefullyonline and as such willhave disclosures onlyavailable digitally, consumers mayoptoutofdigitaldelivery.

77Nevertheless, we expectfewerconsumers tooptoutofdigitaldelivery compared with those who have previouslyoptedin. Given continually increasinguse ofdigitaltechnology, particularlytheinternetand smartphones, we would expectthese newdigitaldisclosurerecipientsto fall intothree broad categories(notincludingthose consumers who optoutof digitaldisclosure):

(a)thosewho preferdigitaldisclosure,buthave notmadethe effort toopt in;

(b)thosewho are indifferenttothe method ofdisclosure;and

(c)thosewho do notaccessthedisclosurebecauseofalackofaccess to digitaltechnology, notaccessingrelevantdigitaltechnologyorbecause an addressed disclosureormessage advisingof the disclosuredoesnot reach the consumer.

78For the firsttwo categoriesofconsumer, digitaldisclosure willbe anet positive.Thebenefits ofthis optionincludeease and convenience ofuse by consumers,includingenablingdisclosures tobe viewed on mobile devices.

79Therearealso time savings forconsumers becauseissuers can deliver disclosures inrealtime, ratherthan waitingforpost. Digitaldisclosure may assistpeopleto be more organisedwithinformation and alloweasier retrievalforreviewbecausedigitalinformationcan beeasiertofile, categoriseandsearchthanpaper.