14 June 2022

• ASIC has shared its insights on how consumer outcomes are being influenced in a recent article published in the Behavioural Economics Guide 2022.
• The article revealed how some firms have exploited or ignored consumers’ behavioural vulnerabilities in the choice architecture of their products.
• We remind firms to design and distribute their products appropriately to meet consumer needs.

In a recent article published in the international Behavioural Economics Guide 2022, ASIC shares how regulators and financial services firms can use behavioural insights to get better outcomes for consumers.

The article, titled ‘Helping or harming? How behavioural levers can influence people’s financial outcomes’, shares findings from a review of over 100 ASIC reports, which identified five common ‘behavioural levers’ that can be used by firms to influence consumers (for better or worse), and five ‘situational vulnerabilities’ that can amplify poor consumer outcomes. The review also found that any financial consumer can find themselves vulnerable to poor outcomes – even the most active, experienced, and confident.

Illustrated with examples drawn from the review, the article unpacks how some firms have exploited or ignored consumers’ behavioural vulnerabilities in the choice architecture of their products.

Understanding these factors not only enhances regulators’ ability to identify, describe, prove and prevent harm, but also reminds firms that they are in a uniquely powerful position to ensure their choice architecture helps – rather than harms – their customers.

This is particularly relevant to outcomes-based obligations, such as the design and distribution obligations, under which firms are required to design products that meet consumer needs; distribute them in a way that means they are likely to reach the appropriate consumers; and monitor consumer outcomes. It is also relevant to the product intervention power for ASIC, which allows ASIC to temporarily intervene in a range of ways to prevent significant consumer detriment and improve consumer outcomes.

To read the full article download Behavioural Economics Guide 2022.

Related materials

• RG 274 Product design and distribution obligations
• RG 272 Product intervention power
• REP 632 Disclosure: Why it shouldn’t be the default

ASIC is Australia’s corporate, markets and financial services regulator.