ASIC to be handed new product powers

ASIC will be handed new legal powers to intervene in product distribution


By Sarah Kendell

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ASIC will be empowered to intervene in the distribution of financial products where they are being inappropriately sold under new draft legislation released by the government yesterday.

The new powers, which the regulator has repeatedly called for and which were recommendations of the Financial System Inquiry, will require product issuers to identify appropriate target markets and distribution channels for their products, which must be regularly reviewed and monitored to ensure compliance.

The obligations will apply to all retail financial products, with the regulator given discretion to provide exemptions in special cases.

In addition, ASIC will be empowered to intervene in product distribution where it perceives a risk of consumer detriment, with the ability to amend product disclosure statements, impose consumer warnings on certain products, restrict how a product is distributed, ban remuneration practices associated with the product or ban the product itself.

Minister for Revenue and Financial Services Kelly O’Dwyer said the intervention powers would be given to ASIC for 18 months, after which time the government would decide if they should be made permanent.

Submissions for the legislation around the new powers are open until 9 February.

Additionally, the regulator announced it had agreed two enforceable undertakings (EU) with advisers requiring independent oversight of their advice for the next three years.

Christopher Cannon and Danny Pianta, both authorised representatives under the licensee Austplan, were found to have provided insurance advice to clients that did not comply with financial services laws.

ASIC said it had uncovered instances where both advisers had failed to act in the best interests of clients when providing personal advice, advised clients to inappropriately switch insurance products, failed to consider all the factors involved in advising clients to switch insurance products, and used generic statements of advice templates when making product recommendations.

The regulator acknowledged both advisers’ co-operation with their investigations, and said it had agreed EUs with Cannon and Pianta that would see their advice overseen by an independent expert for three years.

Both advisers were directors of financial planning firm PAC Financial.

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