The Australian Securities & Investments Commission (ASIC) published updated regulatory guidance on the prohibition of hawking financial products that will ban the retail sale of unsolicited financial products on Thursday.
According to the new rules, financial instrument providers must receive clear consent from the customer with the signing of a contract. In addition, it added that consent must be positive, voluntary and clear.
“These changes put in place fairness protections, so consumers are not sold products they don’t want or don’t need. The restrictions mean consumer needs will be central to how firms offer products,” said ASIC Deputy Chair Karen Chester.
These reforms were introduced with recommendations of the Royal Commission on misconduct in the banking, superannuation and financial services industry. The purpose of them is to put a curb on rising cold calls and other unsolicited contacts.
The new regulatory guidelines will be introduced under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020, which will come into effect on October 5.
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Protecting the Retail Customers’ Interest
“The new hawking prohibition addresses long-held concerns about poor consumer outcomes from unsolicited sales of financial products,” Chester added. “The reforms introduced by the Government mean that consumers will be able to control how and when they are offered products, rather than being caught unawares or feeling pressured to make quick decisions.”
According to ASIC, it will provide guidance to the industry on how they will comply with the new regime.
Interestingly, the Aussie regulator heavily shifted its focus on customer protection and is actively curbing risky financial products and practices. Earlier it brought several restrictions on the CFDs industry and temporarily banned the sale and distribution of binary options.
“Under the new laws, ASIC will be better able to tackle poor conduct by firms where consumers are pressured into products that are not right for them,” the Deputy Chair said.