Transparency; Presentation of Information and Gamification
A common feature of recent regulatory discourse, in the context of digitalised financial services, is the most effective way to present information, regulatory disclosures and key facts to customers to ensure effective engagement through a mobile application.
MiFID II has various different client disclosure requirements, one of which requires “all information, including marketing communications addressed by investment firms to clients to be fair, clear and not misleading”
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.One of the key risks with the presentation of information is the risk that it confuses, complicates, contradicts or is otherwise unhelpful or misleading to the investor. It’s important for their protection that they are easily able to consume the pertinent information relating to product features and risks to make an informed investment decision. However, the amount of regulatory disclosures are intense and there is a very real risk of information overload when presented to a client on a mobile screen.
It’s refreshing to see ESMA introduce the possibility in the future of alternative
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concepts of presentation of information through video, infographics and gamified reward programmes. Lastly, on the topic of gamification, while it might be useful from a behavioural perspective to incentivise the consumption of important information by the investor, global regulators are concerned with its use to incentivise more trading on investment platforms.
While an effective Conduct Risk Framework should identify these risks, ensure mitigants and controls are in place to manage them - many commentators are questioning whether these practices should be legislated against in the pursuit of enhanced levels of investor protection.