Writing’s on the wall for disclosure documents

Jeremy Cooper

Nearly half of Australia’s adult population can’t really read well enough to be able to understand investor disclosure documents, according to the Australian Securities and InvestmentsCommission’s(ASIC’s) deputy director, Jeremy Cooper.

Speaking at ASIC’s Summer School 2008 last month, Cooper said the regulator was being “confronted” by this statistic despite “working very hard on disclosure as a clear, concise and effective” tool.

“When we’re confronted by the statistics, we learn that 46 per cent of the Australian adult population can’t really read well enough to be able to understand the disclosure documents that we worked so hard on.”

Cooper added in his keynote address — on the role of regulators in building long-term investor wealth — that ASIC is working to “facilitate online participation in financial services as much as we can … to increase engagement”.

“We’ve been thinking that financial services consumption is far too paper-based and that we really need to get much more information online, much more disclosure online, many more tools online than we currently have.”

He added that ‘engagement’ is “a word that we have bumped into a lot in our thinking about retail investors because it remains a fact that a substantial part of our population is still not engaged”.

“Only about 20 per cent of consumers use financial advisers. So what about the other 80 per cent?

“Is it a matter of just rolling out more advisers or can we have other ideas like imbedding advice in the products themselves?

“So, the more functional and well-designed a product is, the less face-to-face advice is needed.”