Quigley jumped - with help from a push

Pushed or jumped? For the departing National Broadband Co chief executive Mike Quigley it would have been both. His two key patrons were gone. NBN chairman Harrison Young was replaced by Siobhan McKenna in March, and Kevin Rudd's coup last month sent former communications minister Stephen Conroy to the back benches.

The NBN itself is under pressure over a delayed rollout, and its future is unclear. It should have a continuing role in a Coalition government's less ambitious patchwork broadband rollout, in transit links between cities, greenfields rollouts to new suburbs, satellite and fixed wireless services. It also has written large long-term contracts that a Coalition government would honour.

Exactly what the NBN would look like under a Coalition government is unclear, however, and Quigley knew that in any event he would not lead a Coalition government-controlled NBN. He was too closely associated with the full-blown fibre-to-the-home rollout that Conroy created, and the politics that surrounded it.

McKenna knew it, too. As chairman it was her job to organise succession, and she has been doing so: Quigley said on Friday that the board agreed that it was time for him to leave.

After coming out of retirement from senior roles in the Alcatel group to take the chief executive role four years ago, Quigley leaves with a mixed record.

He helped forge the agreement with Telstra that made the project physically possible, almost completed negotiations with the ACCC to create a workable access regime for the company and its wholesale telco customers, and created the network's architecture, coping with political interference that increased the complexity and cost of the project in the process, by adding to the number of network connection points, for example.

He also created a modular rollout plan that has already halved NBN's connection costs per premise as NBN repeats and refines its processes.

Quigley said on Friday the NBN's recent announcement that it had reached revised, downgraded targets for network coverage cleared the way for him to stand aside. There are, however, continuing concerns that NBN does not have sufficient project management skills or subcontracted construction resources to deliver the huge project that Labor launched on time and on budget.

With the network design done and the key agreements with Telstra and others in the bag, project management becomes the key skill for the person who takes over.

Opposition communications spokesman Malcolm Turnbull is right that the appointment surely cannot be made before the election result is known. (Quigley says he will serve until the handover occurs.) The new chief executive's brief is heavily contingent on the election outcome.

Disclosure? What's that

One of the lessons securities and investment regulators have learnt in the past decade is that disclosure means little if what is being "disclosed" to investors isn't read by them, or is not understood.

As the head of Britain's new financial services and market regulator, Martin Wheatley, quipped late last year, what is disclosure worth if 50 per cent of the population does not understand what 50 per cent means?

Disclosure can also fail because consumers don't use the information they get rationally, and an interesting example of that surfaced last month at a conference jointly hosted in Toronto by the International Organisation of Securities Commissions, the peak body for market and investment regulators that Australian Securities and Investments Commission chairman Greg Medcraft chairs.

Medcraft was in the audience as a US behavioural science academic, Sunita Sah, explained what happened when a group was asked to choose between two competing lottery options, one of which was objectively more attractive.

Most of those surveyed made the right choice, unaided. However, just over half of them chose the inferior option when they were advised to do so - and an astonishing 81 per cent chose the inferior option when told by the adviser that the adviser had a financial interest in them doing so.

They did so because the disclosure itself created pressure on them to act in the adviser's declared self-interest, and regulators around the world are mulling this and other behavioural science lessons.

IOSCO's board met last month for the first time under Medcraft's chairmanship, and said in a subsequent statement that ways to use behavioural economics "to build confidence and encourage informed decision-making by retail investors" were discussed.

What that means in practice remains to be seen, but the new approach could produce significant changes in the way financial products are marketed as regulators look for ways to short-circuit the behavioural traits research is highlighting.

Time-out periods between the receipt of advice and the final decision are likely to be promoted.

Investors will also, increasingly likely, be asked to pass education courses before they are allowed to invest in some products, as is becoming the norm is areas including contracts for difference.

More generally, behavioural research is being taken by regulators as an argument in favour of restrictions on the distribution of some products, with the agreement of product creators and marketers ideally, but in the United Kingdom and Europe at least, compulsorily if necessary.

Medcraft is discussing the trend here, but the new Financial Conduct Authority that Martin Wheatley heads up in the United Kingdom is leading the change.

It has been issuing briefs on how consumer behaviour affects the take-up of financial products as part of what Wheatley says is a "greater focus on understanding consumer behaviour". It is also armed with "product intervention" powers that enable it to intervene and ban products unilaterally.

ASIC does not have the same banning powers here. But the FCA model has already spread to regulators in Europe, and may eventually become the global norm: something for the financial system inquiry that Joe Hockey has foreshadowed to consider if the Coalition wins the election.

mmaiden@fairfaxmedia.com.au