Retail Finance: A path forward for education, advice and disclosure


Download ANZSFRC Statement No. 7: Retail Finance

Even though the Australian and New Zealand banking sectors largely escaped the calamities of the Global Financial Crisis, there have still been substantial losses (albeit not necessarily GFC related) for retail investors outside the prudentially regulated sector. In Australia, losses to investors from failures of financial advisors and financial product manufacturers led to the parliamentary Ripoll inquiry whose recommendations included ensuring greater disclosure and improved investor education as well as specific suggestions on financial advice and commissions. In New Zealand, there have been around fifty finance company collapses, involving accumulated losses of over NZD 6 billion affecting over 100,000 investors, the most recent being the August 2010 collapse of South Canterbury Finance. Aside from losses to individuals and taxpayers, these episodes have important implications for confidence in our financial system.

Regulatory changes are taking place. In both countries, there has been some recent movement towards a more rules-based approach in the retail finance area (which has costs in the form of inhibiting financial innovation), but the overall emphasis remains largely principles-based. The caveat emptor approach to financial regulation based on education, advice, and disclosure requires high levels of financial literacy and appropriate disclosure. In this Statement the Australia-New Zealand Shadow Financial Regulatory Committee (ANZSFRC) explores what improvements in financial education, literacy, and disclosure arrangements warrant further attention.


  • Emphasizes the importance of financial literacy for principles-based financial regulation that is based on disclosure and caveat emptor.
  • Recommends that key financial concepts need to be fully integrated into, and emphasized by, the national mathematics curriculum.
  • Recommends that the governments of Australia and New Zealand reconsider policies that allow school pupils to escape formal mathematics education at too early an age.
  • Recommends that information about finance principles, products, markets, institutions and history be incorporated into national high school curricula within courses that are taken by all students, and, to the greatest extent possible, these topics be integrated with the tools and concepts taught in the mathematics curriculum, particularly through the use of case studies and experiential learning.
  • Supports further development of public good services in the area of financial literacy, and encourages financial institutions to become more active in the promotion, development, and funding of financial literacy services and activities.
  • Recommends the establishment of (i) a simple, minimalist and concise list of information designed specifically for retail investors be included in all disclosure documents for financial securities and products and (ii) anonline forum designed to elicit information about a financial security or product offering during a pre-registration period.

This statement was presented at the 15th ACFS – Finsia Banking and Finance Conference held 30 Sep – 1 Oct 2010 in Melbourne.

Download ANZSFRC Statement No. 7: Retail Finance

Download Media Release

Following the example of the Shadow Financial Regulatory Committees in Asia, Europe, Japan, Latin America and the United States, a group of well known professors from Australia and New Zealand, who are all experts in the fields of banking, finance, and the regulation and supervision of financial institutions and markets, set up the Australia-New Zealand Shadow Financial Regulatory Committee (ANZSFRC). The ANZSFRC had its inaugural meeting in Sydney in December 2006 when its first statement entitled Managing Bank Failure in Australia and New Zealand: Rapid Access Matters was issued during the 2006 Australasian Finance and Banking Conference. Co-chairs of the ANZSFRC are Prof. Glenn Boyle and Prof. Kevin Davis. Glenn Boyle is Professor of Finance at the University of Canterbury, Christchurch. Kevin Davis is Research Director of the Australian Centre for Financial Studies and Professor of Finance at the University of Melbourne.

For more information on the ANZSFRC click here

Media contact details:
Professor Kevin Davis
Research Director, Australian Centre for Financial Studies and
Professor of Finance, University of Melbourne
W: +61 3 9666 1050
Mob: +61 409 970 559