Individuals tend to make different decisions when interacting with an online interface as opposed to talking with a human or relying on print materials, according to a study by the board of the International Organization of Securities Commissions (IOSCO).
That’s one of the results of the study, entitled The Application of Behavioural Insights to Retail Investor Protection, aimed at providing guidance to help regulators better understand the behaviours of retail investors in making financial investment decisions.
The study refers to quantitative and qualitative testing methodologies that regulators use to gather information about how retail investors may suffer harm. It’s these same methodologies that can be used to design and measure the effectiveness of the regulatory response to protect investors and to assess the effectiveness of existing disclosure and other measures.
The report acknowledges that while measures using behavioural insights have the potential to promote informed decision-making, they may not be enough to protect retail investors. That’s why it’s important that regulators continue to impose standards of conduct on investment professionals and regulate the sale of financial products to promote retail investor protection even further.