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ASIC looks to monitor ‘actual’ customer outcomes

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Reporter 6 minute read

Collecting and sharing more data on “actual consumer outcomes” will be a “game-changer” in improving transparency and satisfaction with financial services providers, the deputy chair of ASIC has said.

The financial services regulator has said that its new data regime will aim to address the “key source” of customer frustration with the financial services sector by bridging the gap between “what is promised and what is delivered”.

In a speech delivered on Tuesday (17 July), deputy chair of the Australian Securities and Investments Commission (ASIC) Peter Kell outlined the regulator’s plan to improve standards in the financial services sector through the use of new powers endowed to ASIC under the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018.

Mr Kell stressed the need for greater transparency in the financial sector through “recurrent data collection” about “actual customer outcomes”.


“This has arguably received less attention than discussions of powers and penalties, but I believe it has the potential to be a game-changer, and is already helping to improve outcomes in parts of the industry,” Mr Kell said.

“After all, one of the key sources of community and consumer frustration with the financial services sector is the divergence between what is promised and what is delivered over time. If we can improve transparency around outcomes, this will help with accountability and trust.”

ASIC’s deputy chair noted that the regulator’s call for greater transparency is “not an argument for traditional disclosure”, claiming that “there has been too much reliance on individual disclosure at the point of sale as the answer to a whole host of market problems and failures”.

Mr Kell added: “Too much of this disclosure has been about the ‘promise’ without sufficient information being available about actual outcomes. This has clearly not worked in many areas, or at least not been sufficient on its own.

“Disclosure of conflicts of interest on this basis, for example, has not driven better conduct.”


He continued: “Rather, we need more readily available, industry-wide data on how products and services have actually performed, not just what they promise! This is not just investment returns but issues such as how complaints are dealt with.

“Importantly, this should be recurrent data, rather than one-off, so that we can all see trends over time. This will, in ASIC’s view, help not only the regulator but industry participants, consumers and other stakeholders.”

The deputy chair stated that while ASIC has undertaken “one-off data projects”, including its broker remuneration review, the new data collection regime would supply the industry and consumers alike with a broader picture of trends and issues facing the industry and “deliver net benefits for all parties through, for example, cost-effective recurrent collection and reduced need for expensive bespoke data requests”.

“We will be able to then use this data in a number of ways, including identify potential trends and issues that can help us prioritise our regulatory actions and provide feedback to [the] industry,” the deputy chair said.  

“We also envisage the release of aggregated data to help consumers and the public more broadly.”

Further, Mr Kell said that the data collection regime would allow the regulator to:

  • better understand the markets ASIC regulates
  • more effectively detect and quantify existing and emerging risks
  • identify sub-sectors for deeper supervisory focus
  • drive better consumer outcomes in part by providing data publicly

“Ultimately, a major benefit will come from greater consumer and community understanding and trust,” Mr Kell said.

ASIC’s data collection regime will commence this year with two data collection pilots relating to mortgage and managed fund flow data.

Defining consumer outcomes

The topic of monitoring and defining consumer outcomes has been raised frequently in the broker space. Last year, it was brought to the fore with ASIC’s focus on whether brokers are providing “good consumer outcomes” as part of its remuneration review. The subject was questioned by many in the industry, particularly because there is no current legislative definition for what this could look like for brokers.

In its response to ASIC’s review of broker remuneration, the Combined Industry Forum set a standard definition for “good customer outcomes”, which looks at the size and structure of the loan, affordability, responsible lending requirements and individual customer needs.

The definition reads: “The customer has obtained a loan which is appropriate (in terms of size and structure), is affordable, applied for in a compliant manner and meets the customer’s set of objectives at the time of seeking the loan.”

The government is yet to release its response to ASIC’s review of broker remuneration, which was handed to the government in March last year.

 [Related: ASIC calls for an end to the blame game]

ASIC looks to monitor ‘actual’ customer outcomes
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