Today I released for consultation exposure draft regulations which are an important part of the financial product Design and Distribution Obligations and Australian Securities and Investments Commission (ASIC) Product Intervention Power reform package.
The regulations support the Government's proposed reforms which are designed to ensure that financial products are targeted and sold to the right consumers and allow ASIC to intervene where there is evidence of significant detriment to consumers.
Legislation to implement the reforms, the Corporations Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018, was introduced into the Parliament on 20 September 2018.
In relation to the Design and Distribution Obligations, the regulations will give effect to the legislation by applying the regime to a range of financial products not covered by the bill and by ensuring that the regime operates as intended when applying to distributors of financial products. The proposed coverage by regulations of particular products was consulted between December 2017 and July 2018.
In relation to the Product Intervention Power, the regulations will apply the power to a number of financial products which are not currently regulated by the Corporations Act 2001 but have been identified as having resulted in, or have the potential to result in, significant consumer detriment. These products are:
- funeral expenses insurance;
- certain extended warranties that are functionally equivalent to add-on insurance; and
- short-term credit that is currently not regulated under the National Consumer Credit Protection Act 2009.
The Government invites stakeholder feedback on the exposure draft regulations in order to ensure that they operate as intended. The draft regulations and explanatory material are available from the Treasury website, where stakeholders are able to lodge their submissions.
Consultation will conclude on 13 November 2018.