Super funds urge regulatory sandbox on digital disclosures

Superannuation funds have recommended to the Australian Securities and Investments Commission (ASIC) that it provides with a regulatory sandbox to test “innovative approaches” to making digital disclosures.

The recommendation has come via the Association of Superannuation Funds of Australia (ASFA) who have responded to an ASIC consultation around digital disclosures by arguing that funds should be given flexibility to test new approaches.

Among the innovative approaches ASFA has suggested is the use of visual representations and modular disclosures.

“ASIC should consider the creation of a regulatory sandbox for innovative approaches to digital disclosures, so that regulated entities have an avenue through which they can test a potential approach with ASIC directly before going to the market at large,” the ASFA submission said.

It suggested this would allow the regulator to clarify if an approach met regulatory expectations.

The submission said that even if an expansion of the sandbox is not adopted by ASIC, the regulator should consider establishing a direct hotline or other pathway for regulated entities to be able to test new ideas in respect of digital disclosures with ASIC prior to going to the market at large.

“This would allow innovative solutions which can assist members with varying members of financial literacy to be tested without regulatory risk,” it said.

ASFA suggested that ASIC could achieve this by expanding the Enhanced Regulatory Sandbox which it introduced in September, 2020.

Outlining what it sees an innovative approaches, ASFA outlined the following:

• Visual representations – including images, illustrations, infographics etc rather than just words, noting superannuation is available to every Australian worker, across a broad spectrum of financial literacy levels, and innovative solutions like this can assist in maximising accessibility;
• Provision of disclosures in modular ways, so that the target audience does not get overwhelmed by receiving too much information at once;
• How to best facilitate the use of technologies which allow for personalisation, in order to encourage engagement with the information being disclosed.