There will be no excuse for the those manufacturing financial products not knowing if their products have resulted in complaints made to financial planners or others, under the Government’s proposed new Design and Distribution rules.
Alongside the announcement of a further round of stakeholder consultations on the new Australian Securities and Investments Commission (ASIC) product intervention powers, the revised legislative draft for the new laws has revealed that distributors will be required to provide information about the number of complaints about the product.
The latest explanatory memorandum around the legislation makes clear that financial planning firms and other people responsible for making offers or giving advice to potential investors will also have significant obligations.
The new legislation would see financial planners or their licensees obliged to take “reasonable steps” to make themselves aware of a product’s appropriateness or otherwise with respect to a target market and the status of a manufacturer’s product and any review of that product.
The explanatory memorandum said the new law was using a risk management approach to determine what satisfied the requirement of “reasonable steps” and that the term meant those steps “reasonably able to be taken so that retail product distribution conduct is consistent with its target market determination”.
It said this included the likelihood of such dealings or advice resulting in a person acquiring a product otherwise than in accordance with its target market determination.
Commenting on the further round of stakeholder consultation on the new legislation, the Minister for Revenue and Financial Services, Kelly O’Dwyer said the Government had carefully considered feedback and made amendments to the legislation.
She said the Design and Distribution Obligations and the Product Intervention Power were about ensuring a customer-centric approach to product design, marketing and distribution.