Government proposes product banning powers for ASIC

The government has released a new consultation paper, which sets out a proposal to give ASIC the power to ban financial products that are deemed too risky for consumers.

Yesterday, Minister for Revenue and Financial Services Kelly O’Dwyer announced that the government is seeking feedback on two key proposals from the Financial System Inquiry.

The first proposal is around the introduction of design and distribution obligations on issuers and distributors, according to a statement.

The second one is a product intervention power for ASIC, that would enable the regulator to intervene where a product is identified as “creating a risk of significant consumer detriment”.

This will include allowing ASIC to impose additional disclosure obligations, mandate warning statements, require amendments to advertising documents, as well as restrict and ban the distribution of products.

Meanwhile, the design and distribution obligation measure is intended to make product issuers and distributors more accountable for the products they sell. This will include providers of insurance products, investment products, margin loans and derivatives.

“These measures will improve outcomes for consumers and make ASIC a more proactive regulator,” Ms O’Dwyer said.

“Implementation of these measures is a further example of the Turnbull government taking real action to protect consumers of financial products and services.

“The consultation period on the paper will be three months, recognising the complexity of the measures and the importance of getting the balance right as well as taking into account the holiday season.”

The due date for submissions is 15 March 2017.

 

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