Lawyers argue against post-sale product intervention
Proposed new financial product design and distribution laws should not extend to conduct that occurs after a financial product has been formally acquired, according to the Law Council of Australia.
In a submission filed with the Senate Economics Legislation Committee review of the Government’s Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018, the Law Council said it believed an amendment was necessary with respect to the definition of “retail product distribution conduct”.
It suggested that this could influence the activities of distributors such as advisers and superannuation fund trustees where they might well give a Product Disclosure Statement to an existing superannuation fund member as a means of reminding the member of the features of their product.
The Law Council submission noted that a similar limitation had already been included in the Bill in relation to the Australian Securities and Investments Commission’s product intervention powers.
It said that under that power, the legislation proposed that a product intervention order would not apply to a financial product that had already been acquired.
“Just as a product intervention order cannot apply to conduct that occurs after a financial product has been acquired, so too should the distribution obligations not apply to conduct that occurs after an acquisition has occurred,” the Law Council submission said.
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
