Ditch disclosure: Crossan

Speaking at the Institute of Financial Advisers Financial Awareness Week breakfast in Wellington this week, Crossan said she did not want to abandon the disclosure process, but would like to see the word itself replaced.

“I would like to ban the word disclosure because I think disclosure has come to mean a wodge of papers that lawyers look through and mean that the customer really doesn’t understand” Crossan said.

“We need to make the gobbledygook that we’ve heard and seen in disclosure documents much clearer.”

Crossan says these documents talk about volatility when they could say “you might get less back than you think”. “We talk about down-side risk when you might want to say ‘there’s a chance of losing all your money’.

It’s actually changing some of the language and getting it so the consumer actually understands the language,” she said.

Crossan also questioned whether it was possible for the public to trust financial advisers if they took commissions, saying it may be something New Zealand has to start looking at.

The Australian Securities and Investments Commission’s proposals to ban “upfront and trail commissions, volume-based bonuses, soft dollar commissions and fees based on percentage of funds under management”, was also important to watch, she said.

Comments from our readers

On 10 September 2009 at 9:45 am Independent Observer said:

So these are the big issues: semantics

Rather than devoting energy towards discovering the correct words, it may be more productive for various industry-related commissioners to determine how investors will once again trust an industry that has failed to meet expectations.

On 10 September 2009 at 10:12 am Interested Party said:

Yes, lets water down the importance of this document by calling it something as benign as "customer information".
Just a thought, perhaps as another option the Commission could consider public education rather than playing with words.

On 10 September 2009 at 12:12 pm Brian Klee said:

I fully support the change to get away from using the word disclosure and in truth have always referred to mine as the "Financial Services Guide".

On 11 September 2009 at 1:01 pm Interested Party said:

I personally think that anything that allows the the typical kiwi to have a better grasp on financial matters & therefore greater control over their personal finances has to be a good thing. Surely using confusing & misleading words won't work towards making the financial world more accessible to the wider public (& isn't this the focus for the Commission?)

Ditch disclosure: Crossan

Retirement commissioner Diana Crossan wants to see the word “disclosure” banned and replaced with “consumer information” in a bid to make things simpler for consumers.

Thursday, September 10th 2009, 7:48AM 4 Comments

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