The Australian Securities and Investments Commission (ASIC) may choose to use its Product Intervention Power (PIP) to act on issues such as insurance adviser remuneration, according to specialist financial services legal firm, The Fold.
In an analysis of the Design and Distribution Obligation (DDO) and the PIP, the Fold’s Lydia Carstensen and Raj Kanhai said they believed ASIC would use the PIP to deal with a number of long-held concerns about particular sectors where there had been persistent failure to provide customers with protection or value for money.
The pair nominated noted that concerns about “choice architecture” would allow ASIC to effect real change in the motor vehicle industry and with respect to short term consumer credit for more vulnerable customers.
However they then noted risk adviser remuneration, stating that PIP “may allow ASIC to take decisive action even where the area has not been the subject of previous consultations or comprehensive review “for example, insurance adviser remuneration, which was not fully scrutinised during the Hayne Royal commission”.
The two layers said that PIP was an outcome-focused power that allowed ASIC to focus on consumer protection, not whether the product was legally compliant”.
“The PIP should serve as a strong motivation for product providers to ensure their products do not result in consumer detriment, regardless of whether the products they offer are legally compliant or exempt from regulation,” they said.
Comments
If the aim was to get rid of Risk advice/advisers altogether, ASIC has already achieved that aim with LIF legislation and the introduction of FASEA requirements and the adviser exam.
You won't need to reverse a truck over those you've already destroyed to make sure of their demise.
Yes and it's a bit sad when they ask a room full of about 100 advisers who does risk these days and about 4 hands go up. Whilst 10 years ago it was about 30-40.
Comedy at its best. ASIC fictitiously make up report 413 and advisers suffer. Customers suffer and the Life insurance industry is on its knees because of it and under-insurance has worsened. ASIC push back reporting on Life insurance using COVID as the excuse because they don't want to admit blame and being the cause. Then they may have the power to make the situation worse. The criminals are running the jail!
Sounds like a fantastic opportunity to create more jobs at the regulator (at the expense of the private sector). Who could possibly argue against 'exercising outcome-focused power to focus on (unemployed) consumer protection'. Let's get the country moving again by employing bureaucrats to stop those nasty private sector types getting to full of themselves. If they don't stop the private sector being bad, the next thing you know they will multiply.
ASIC will use and abuse anything at their disposal in order to achieve their intended outcome.
They have done it before, they will do it again and they are agenda driven, irrespective of outcome or impact.
The greater the evidence builds, the greater it becomes clear the regulator is in control of Govt.
Virtually nothing from Govt of any strength or acknowledgement of the plight of the current Life Insurance industry and the immense stress, anxiety and torment they have assisted in imposing.
The creation of Report 413 is a prime example of how the answer was created before the question had been asked.
ASIC used a small, compromised and targeted sample group in order to impose wide ranging penalties on all advisers.
Rather than choose to elect a strategy whereby the people doing the wrong thing were punished, ASIC created a report that would serve as a catalyst for wholesale change for both the guilty and the innocent.
The results of this are now clear.
LIF has been a failure.
At some point the regulator must be held to account for the impact of their actions.
If not, the destruction of the advised Life Insurance business will be set in stone.
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