Financial Regulatory Disclosure : Embracing New Communications Channels

Canadian financial regulators have introduced a new disclosure document for mutual and segregated funds called “Fund Facts.” The document is intended to provide investors with information in a simple, accessible, and comparable format.However, the disclosure regime for Fund Facts is too prescriptive, particularly in its format requirements, as it is designed in a size best suited for a paper document. But people are shifting away from paper documents and now frequently digest information using new communications channels, namely, mobile devices such as smart phones.Canadian securities regulators have signaled their intent to develop rules requiring the Fund Facts documents to be delivered before or when a transaction takes place between an investor and an advisor, despite the potential for disrupting transactions that may be in the investor's interest. A better approach would be to create the conditions in which technology and market forces will move the industry standard towards this objective in a competitive environment. This can be done by introducing more flexibility into the formats the industry can use to present the information that must be disclosed. Building more flexibility into this regulation allows for the integration of financial literacy into mandated disclosure