20 September 2018
Media Release - #2018006, 2018

Government introduces law to improve outcomes for financial consumers

Today the Government introduced into the Parliament important legislation designed to ensure that financial products are targeted and sold to the right consumers.

“Design and Distribution Obligations and the Product Intervention Power are about ensuring a customer‑centric approach to product design, marketing and distribution. We have undertaken an extensive consultation process, and carefully listened to stakeholder feedback.  We are confident this Bill will encourage firms to adopt best practice approaches to product design and distribution – improving consumer outcomes, without imposing unnecessary regulatory requirements.” the Assistant Treasurer said.

The measures build on the substantial steps already undertaken by the Government to improve outcomes for consumers in the financial system, including passing legislation to raise professional standards for financial advisers and to improve remuneration arrangements in the life insurance sector.

The Bill also builds on the Government's commitment to ensure ASIC is fit for purpose and can pursue and prosecute those who do the wrong thing.

“The legislation will also strengthen ASIC’s powers to intervene in the distribution of products, reducing potential harm to consumers if a company acts inappropriately,” the Assistant Treasurer said.

The Design and Distribution Obligations will require issuers of financial products to:

  • identify target markets for their products, having regard to the features of products and consumers in those markets;
  • select appropriate distribution channels; and
  • periodically review arrangements to ensure they continue to be appropriate.

In addition, distributors of financial products will be required to:

  • put in place reasonable controls to ensure products are distributed in accordance with the identified target markets; and
  • comply with reasonable requests for information from the issuer in relation to the product’s review.