New laws have been passed through Parliament allowing the corporate regulator the power to intervene whenever a financial product has a risk of “significant consumer detriment”.
The Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) legislation introduces a design and distribution obligations regime for financial services firms as well as a product intervention power for ASIC.
ASIC’s intervention powers take effect immediately, allowing it to intervene whenever there is a risk of significant damage to the consumer.
The design and distribution obligations regime will be phased in over two years. Under the regime, financial product issuers and distributors will be under ASIC’s microscope, ensuring that the design, marketing and distribution of financial and credit products meet consumer needs.
ASIC chair James Shipton said 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,” Mr Shipton said.
“This will also provide invaluable assistance to ASIC as we all seek to rebuild the community’s trust in our banking and broader wealth management industries. And we note the overwhelming level of support this attracted from across the Parliament.”
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