AFCA welcomes new ASIC power

In its response to an ASIC consultation, the Australian Financial Complaints Authority (AFCA) has strongly supported the addition of new product intervention power to ASIC’s regulatory toolkit.

AFCA Chief Ombudsman and CEO David Locke said, “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.”

In June this year, ASIC commenced consultation on its new product intervention power, designed to prevent financial or credit products causing significant consumer detriment. The company regulator’s consultation paper reflects the product intervention power being a broad and flexible tool for ASIC to use. ASIC can take a range of temporary actions including banning a product or product feature, imposing sale restrictions, amending product information or choice architecture.

AFCA’s submissions regarding the extended capacity also proposed the possibility of an increased role for AFCA in informing ASIC’s use of the product intervention power.

“There is potential for AFCA to act as a facilitator in informing ASIC of problem areas within the financial services industry though the intelligence we gather in our complaint handling processes, and systemic issues and serious contravention reporting functions,” Locke said.

AFCA’s full submission to ASIC’s consultation on the proposed administration of its new product intervention power is available on the AFCA website here.

AFCA also made a submission in relation to the proposed exercise of the product intervention power in relation to short term credit, which has also been published on the AFCA website.

More information about the consultation is available on the ASIC website.