The Association of Financial Advisers (AFA) has backed introducing more disclosure obligations for financial product issuers and distributors.

In a submission to a Treasury paper on design and distribution obligations and product intervention powers, it says this will complement current consumer protections.

“Financial products can be very complex products and it is not appropriate to expect all non-advised consumers to be capable of understanding [them],” the submission says.

“The AFA considers product disclosure documents need reviewing – especially to develop standardised summary sections in plain language that can improve a consumer’s understanding.”

Treasury proposes issuers and distributors should identify appropriate target markets for products and put in place reasonable, practical controls that are equitable to other more regulated operators.

“The AFA considers that the proposed measures will distribute responsibility for consumer protection throughout the sector,” the association’s submission says.

“It will help to create cultures within product design and distribution teams that are better aligned to consumer interests than they are currently.

“In time, these measures should help the product design and non-advised distribution channels restore their social licence and support financial advisers with better information to help them act in their clients’ best interests.”

The AFA says when conduct fails, it is important all financial services industry stakeholders can see where the problem started, to help separate product failure from advice failure.