ASIC's new product intervention powers are now open for consultation.
We discussed the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 last year. The goal of the new legislation was to "ensure that financial products are targeted and sold appropriately."
The bill affected advisers as distributors of retail products, and under the new laws advisers would be required to implement controls to ensure products are distributed in accordance with the relevant target markets and "comply with reasonable requests for information from the issuer in relation to the product's review."
How ASIC will change its focus
ASIC's powers will change as a result of the bill, with the regulator able to intervene and "take temporary action where financial and credit products have resulted in or are likely to result in, significant consumer detriment." Importantly, the law focuses on "reducing significant detriment to consumers," as opposed to just having ASIC step in after a breach of the law.
Explaining ASIC's new powers, deputy chair Karen Chester said: "The product intervention power is an incredibly important addition to ASIC’s regulatory toolkit."
"ASIC can now step in and respond to significant consumer detriment in a targeted and timely way," she continued. "But there are also important checks and balances – it is a temporary intervention power and we must consult before each and every use."
Chester also noted that the intervention powers are not a new concept: "Australia is joining regulators in other jurisdictions like the US, the UK, the EU, Hong Kong and Taiwan with product intervention powers."
So what’s open for consultation?
According to ASIC’s statement, the aspects of the new powers open for consultation are:
Consultation is open until August 7 – you can make a submission using this email address.
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