The Australian Securities and Investments Commission (ASIC) has acknowledged that product manufacturers have too often blamed distributors such as financial planners when product failures have occurred.
ASIC deputy chairman, Peter Kell has told the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector that such instances have occurred over many years.
Explaining why ASIC was pursuing a product intervention power, Kell said there had been an unwillingness on the part of product manufacturers to take responsibility.
“… one of the problems we have typically encountered over many years in this sector is that if something goes wrong you often have the product manufacturer pointing the figure at the distributor, such as a financial adviser, saying ‘It wasn’t us, it was the way it was sold’ and then you have the adviser, pointing the finger back at the product manufacturer, saying ‘It wasn’t us, we just sold the product; it was the way it was designed’,” he said.
“There has been an unwillingness to take responsibility, and a lack of accountability, around ultimately ensuring that the customer gets the right outcome. And that has not been helped by the lack of clarity in the law,” Kell said.
He said that design and distribution obligations were, in many ways, a way of addressing that problem.
“… where there is a lack of clarity around who is accountable and finger-pointing saying ‘It was their fault, not my fault’ I think the message now is that that is no longer acceptable,” Kell said.
“I do not think it is unreasonable to expect the key players on the supply side to take some responsibility for ensuring that their products are appropriate and that they end up in the right hands. That, after all, was one of the key drivers of the disaster that was the global financial crisis. We want to make sure that that is not how this sector operates going forward.”
