ASIC consults on draft guidance for incoming anti hawking reforms
02 August 2021
02 August 2021
Schedule 5 of the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth) (Amending Act) commences on 5 October 2021 and, amongst other things, amends the existing anti-hawking regime in Parts 6D and 7 of the Corporations Act 2001 (Cth) (Corporations Act). These amendments are intended to give effect to recommendations 3.4 and 4.1 of the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry (the Financial Services Royal Commission).
Importantly, the Amending Act replaces the existing three separate prohibitions on hawking of financial products with a new general prohibition in section 992A(1) that provides that a person must not offer a financial product for issue or sale to a customer, or request, or invite the customer to ask or apply for a financial product or to purchase a financial product, if:
(a) the customer is a retail client; and
(b) the offer, request, or invitation is made in the course of, or because of, an unsolicited contact with the customer.
On 23 July 2021, the Australian Securities and Investments Commission (ASIC) issued Consultation Paper 346 The hawking prohibition: Update to RG 38 (CP 346). ASIC is seeking feedback on CP 346 and its proposals for updating Regulatory Guide 38 The hawking prohibitions (RG 38) to reflect the upcoming hawking reforms. Submissions are due on 18 August 2021 and ASIC is aiming to release the updated RG 38 in September 2021.
In particular, ASIC is seeking feedback on:
ASIC is proposing to update its guidance to include further information on the forms of communication that are subject to the hawking prohibition, including real-time interactions, advertising and information-giving practices.
ASIC has sought feedback from stakeholders on:
ASIC is proposing to revise its guidance on the nature of the consent that is required from a consumer who wishes to be contacted about a financial product.
ASIC has sought feedback from stakeholders on:
ASIC is proposing to revise its guidance to clarify that it expects an offeror to offer, issue or sell to a consumer (or invite or request them to purchase or apply for) only financial products that are reasonably within scope of what the consumer has consented to.
ASIC has sought feedback from stakeholders on:
ASIC is proposing to include guidance on the consumer remedy giving a consumer the right to return a product and receive a refund when the hawking prohibition has been breached, as well as how this remedy will operate for different financial products.
ASIC has sought feedback from stakeholders on:
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.
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