The Australian Securities and Investments Commission (ASIC) has canvassed its proposed product intervention powers being extended to intervening with respect to what it sees as inappropriate remuneration structures.
At the same time as suggesting the financial services industry is suffering “a significant trust deficit in the eyes of the community”, ASIC deputy chairman, Peter Kell has suggested that the regulator should have the power to intervene in remuneration structures if it thinks they are leading to significant harm.
In doing so, Kell suggested that product intervention powers would have allowed ASIC to act sooner with respect to financial advice firms which were charging a service.
In a speech delivered to an industry forum in Melbourne, Kell said the Government was consulting on a product intervention for the regulator that would enable it to intervene where a product was identified as creating a risk of significant consumer detriment.
“The Government is still considering the scope of this power but ideally, this will be a broad flexible power that will enable ASIC to intervene in relation to all products within our jurisdiction, with a range of interventions including where features such as the remuneration structures raise the risk of significant harm,” he said.
“With a flexible power ASIC would be able to take the most effective approach possible in the circumstances to achieve the right market outcomes. We encourage industry to start thinking now about whether your product design and distribution is meeting these obligations, and capable of producing good consumer outcomes.”
The ASIC deputy chairman said the powers would mean that there was no longer the opportunity for product manufacturers to shift blame to product sellers and vice versa when something went wrong.
