The Hon Josh Frydenberg MP
12 September 2019
TAKING ACTION ON THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES ROYAL COMMISSION – CONSULTATION ON NEW FINANCIAL PRODUCT DESIGN AND DISTRIBUTION OBLIGATIONS
The Coalition Government has today released for consultation exposure draft regulations to support the operation of updated Design and Distribution Obligations for financial products.
The update to the regime is part of an additional suite of measures the Government committed to in its response to the Banking, Superannuation and Financial Services Royal Commission.
The Government passed legislation to give effect to the Design and Distribution Obligations and the product intervention powers in April this year giving effect to comments made in the Royal Commission final report.
Since then, ASIC has used the product intervention power to address issues with unreasonably high fees in a short term lending model. ASIC has also consulted on using this power to enhance consumer protections in relation to binary options and contracts for the difference.
The updated Design and Distribution Obligations will further improve consumer outcomes requiring issuers and distributors of financial products to ensure products are only sold to customers for whom they are likely to be suitable.
The regime was extended to include a broader range of financial products, including credit products prior to its passage through Parliament. These regulations will ensure that the obligations operate as intended, both in relation to the range of products covered and the entities that will be subject to the new regime.
The regulations reflect the outcomes of consultation on a previous version of the regulations and the extended scope of the obligations as a result of the Royal Commission.
The Government is taking action on all 76 recommendations contained in the Final Report of the Royal Commission. Restoring trust in Australia’s financial system is part of the Morrison Government’s plan for a stronger economy.
The exposure draft regulations and explanatory material are available on the Treasury website.