ASIC prohibits unsolicited selling of financial products
The Australian Securities and Investments Commission (ASIC) today published updated regulatory guidance on the prohibition of hawking financial products, in a move to put an end to unsolicited selling of financial products.
The reforms to the anti-hawking regime under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 will get into effect on 5 October 2021.
These reforms flow from recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and are designed to tackle consumer harms arising from consumers being approached with unwanted products through cold-calls or other unsolicited contact.
Under the prohibition a person must not offer a financial product to a retail client in the course of or because of unsolicited, real-time contact. A consumer must consent to being contacted, and that consent must be positive, voluntary and clear.
ASIC Deputy Chair Karen Chester said:
‘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.’
‘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. 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 guidance provides further clarity to industry on how they can comply with the regime and how the reforms affect commercial practices. ASIC’s guidance was enhanced by the constructive submissions received from industry and other stakeholders through the consultation. ASIC added an additional 12 examples in response to the feedback received.
Key features of the reforms include:
- application to all financial products (as defined in the Corporations Act 2001);
- a definition of ‘unsolicited contact’ that extends the prohibition from in-person meetings and telephone calls, to any ‘real-time interaction in the nature of a conversation or discussion’ without consumer consent;
- that consumer consent to contact must be positive, voluntary, clear and capable of being reasonably understood;
- that consent only be valid for six weeks from the date it is given and may be withdrawn by the consumer at any time; and
- a statutory right of return for consumers where the hawking prohibition has been breached.
ASIC has previously highlighted the harm and poor consumer outcomes that can occur when consumers are offered products in situations where they are not engaged or have not considered a purchase.