April 8, 2019
The Federal Government passed legislation last week that will allow ASIC to intervene where it sees significant consumer detriment being caused by a financial product.
This additional power granted to ASIC has been bestowed by the passing of design and distribution obligations legislation that will apply for all financial and credit products.
ASIC’s intervention powers will apply in cases where it determines there is actual consumer detriment or where it considers there is a risk of detriment occurring.
…financial services providers are now required …to take a customer focused approach when offering products
According to the Financial Services Council, which has welcomed the new protection laws, these changes mean financial services providers are now required by law to take a customer focused approach when offering products.
FSC CEO, Sally Loane, commented, “The new law requires financial service providers to design and sell products with a target market in mind. While the vast majority of Australians benefit from quality products, this new regime offers an extra layer of protection.”
Meanwhile, ASIC Chair, James Shipton, noted the reforms were a critical factor in the development of a financial services industry in which consumers could feel confident placing their trust. “These new powers will enable ASIC to take broader, more proactive action to improve standards and achieve fairer consumer outcomes in the financial services sector. This will be a significant boost for ASIC in achieving its vision of a fair, strong and efficient financial system for all Australians.”