Bank employees may be misconstrued by customers has giving personal advice unless there is greater clarity injected into the Government’s Design and Distribution laws, according to the Australian Banking Association (ABA).
The ABA has used a submission to the Senate Economics Legislation Committee’s review of the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 to restate that real risks exist of bank customers becoming confused by the design and distribution obligations (DDOs).
“To comply with the DDO and determine whether a consumer falls within a target market, distributors will need to take steps to understand the consumer’s circumstances,” it said. “In taking these steps, there is a risk that consumers will come to believe that (or, at least, be confused as to whether) the supply of the financial product has been made as a result of the consideration of their individual circumstances and is thus akin to receiving personal advice.”
It said customers might believe that because they had been supplied the financial product, a conclusion had been reached that it was appropriate for their unique circumstances, rather than because their circumstances matched those of the target market.
“This requires consumers to be able to discern between supplies of financial product on the basis of the DDO and supplies that are based on personal advice,” the submission said.
The submission also warned that to clarify the situation, staff would likely need to ask questions of customers about their personal circumstances, financial situation or needs and therefore risk being reach of other elements of the law.
“However, the client may also be left believing that their personal circumstances have been taken account of for purposes other than simply determining whether they fit the relevant target market determination,” it said.