AFCA Welcomes ASIC Product Intervention Powers

The dispute resolution agency says the powers will lead to better protection for consumers

The Australian Financial Complaints Authority (AFCA) issued a statement on Tuesday saying that it has “strongly welcomed” the product intervention powers that have been handed to the Australian Securities and Investments Commission (ASIC).

That announcement seems to be a thinly veiled reference to new regulations announced by the Australian regulator last week.

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ASIC has said that it plans to bring in rules that largely mimic laws introduced a year ago by the European Securities and Markets Authority (ESMA). Binary options will be banned and leverage on contracts-for-difference (CFDs) will be restricted.

In fact, the Aussie regulator has gone further than ESMA. The European regulator permitted a maximum of 30:1 leverage. Assuming the regulations go into effect, ASIC will only be allowing traders to access leverage of 20:1.

Alongside the bans on leverage will be restrictions on marketing. Welcome bonuses will, for example, no longer be allowed in Australia.

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Better for consumers

And the AFCA, which provides dispute resolution services to retail clients, said that the product intervention measures given to ASIC will lead to better protection for investors.

“AFCA strongly welcomes the addition of the product intervention power to ASIC’s regulatory toolkit,” said AFCA chief ombudsman and CEO David Locke.

“We believe this new power will enhance ASIC’s ability to make proactive interventions in response to financial products that deliver poor consumer outcomes, irrespective of whether the financial firm has complied with legislative or regulatory requirements.”

The AFCA’s comments come a day after the agency said that it will be publishing the names of firms involved in dispute resolution processes.

 

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