Product manufacturers should not be excluded from the target market of the Australian Securities and Investment Commission’s product intervention powers, according to industry funds body, the Australian Institute of Superannuation Trustees (AIST).
In a submission filed with the Senate Economic Legislation Committee, the AIST said that investment managers could be regarded as product manufacturers and that the Royal Commission had “witnessed many examples where related parties such as investment managers have not acted in members’ best interest”.
“This, coupled with the European inclusion of product manufacturers in similar legislation, drives AIST to query why such a carve-out has been proposed,” the AIST said.
“All components of the product manufacturing and distribution chain must both take responsibility for products and be held accountable for products,” it said. “This carve-out is part of an ongoing systemic set of carve-outs from the legislative framework.”
The AIST claimed that, in the end, it would be to consumers’ detriment.
The AIST said the bottom line of the legislation was that it did not cover all the key entities which created and distributed products, with investment management companies and product providers, which in turn provide information to platforms, exempted from ensuring that the products they developed and sold were suitable.
“International best practice has not been followed,” it said. “The European MiFID II requirements oblige product providers and parent entities to determine ‘target markets’. AIST once again queries why these entities have been carved out from the proposals.”