Last year, we discussed the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018, which then-Minister for Revenue and Financial Services Kelly O'Dwyer said would enable ASIC to "intervene in the distribution of the product to prevent harm to consumers" in circumstances where it's determined that the product is being "inappropriately targeted or sold."
The law targeted "retail product distribution conduct," which is defined as dealing in the product in relation to a retail client; giving a disclosure document in relation to an offer of the product to a retail client; providing financial product advice in relation to the retail client; and making a "recognised offer, in relation to a recognised jurisdiction, of the product."
Now, as per a statement from Treasurer Josh Frydenberg, the laws will extend further, so as to "improve consumer outcomes requiring issuers and distributors of financial products to ensure products are only sold to customers for whom they are likely to be suitable."
Corporations Amendment (Design and Distribution Obligations) Regulations 2019, open for consultation until October 11, will extend the regime to cover the following products:
Frydenberg continued: “These regulations will ensure that the obligations operate as intended, both in relation to the range of products covered and the entities that will be subject to the new regime.
“The regulations reflect the outcomes of consultation on a previous version of the regulations and the extended scope of the obligations as a result of the Royal Commission.”
Note that, as per the original bill, where advisers qualify as “distributors” of financial products, they will need to implement controls to ensure products are distributed in accordance with the relevant target markets and "comply with reasonable requests for information from the issuer in relation to the product's review."
This means advisers will be prohibited from dealing in and providing advice on a product unless the issuer has provided a target market determination. If one has been made, they’ll have to take "reasonable steps" to ensure any advice provided is consistent with the target market determination and notify offerors (who will then be required to notify ASIC) of any significant dealing in a product that wasn't consistent.
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here.
With so many advisers departing the industry, ASIC has opened consultati....
17 November, 2020
With so many advisers departing the industry, ASIC has opened consultation for how the regulatory environment can be adjusted or clarified to incre....
12 September, 2019
10 September, 2019
Here's what you need to know.