The Australian Securities and Investments Commission (ASIC) has announced it will take a reasonable approach in the early stages of the reforms arising from the Hayne Royal Commission and other inquiries.
The new laws would include design and distribution obligations (DDOs), restrictions on the unsolicited selling of financial products (hawking), a deferred sales model for add-on insurance products, reference checking and information sharing requirements for financial advisers and brokers, and new requirements around how breaches were reported to ASIC and disputes were managed internally in firms.
The new laws would provide consumers with long-term protection from the harms highlighted by the Royal Commission, and close regulatory gaps that previously existed.
The corporate regulator also said that in adopting this approach, it would consider the context that firms were operating in, including the scale of the changes and the challenges arising from the current operating environment.
The benefits of the reforms would include:
- Consumer focused product design at the heart of business models, and more transparency about target markets;
- A reduction in sales that occurred in circumstances where consumers were subject to pressure;
- Greater transparency about problems arising, in the form of complaints and number of breaches; and
- More consumer-centric and timely complaint handling.
“These changes will support fairer outcomes for consumers and a stronger financial system for all Australians,” ASIC chair Joe Longo said.
“While these reforms have been in the pipeline for some time, ASIC recognises they require significant changes to businesses’ systems and processes and take effect at the same time industry is facing other challenges, including from COVID-19 and renewed lockdowns.
“We therefore recognise there will be a period of transition as industry finalises implementation of additional compliance measures, and ASIC will take a reasonable approach in the early stages of these reforms provided industry participants are using their best efforts to comply.”