The external dispute resolutions scheme has backed the corporate regulator’s new product intervention powers and has requested the opportunity to “act as a facilitator” in informing ASIC of “problem areas”.
The Australian Financial Complaints Authority (AFCA) has published its submission to the Australian Securities and Investments Commission (ASIC) as part of a consultation process regarding the corporate regulator’s administration of its new product intervention powers – enshrined under the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers).
The new laws, which were approved in April, enable ASIC to intervene and take temporary action where financial and credit products have “resulted in, or are likely to result in, significant consumer detriment”.
In its submission, AFCA welcomed ASIC’s new remit, claiming that it would produce better outcomes for consumers.
AFCA chief ombudsman and CEO David Locke commented: “AFCA strongly welcomes the addition of the product intervention power to ASIC’s regulatory toolkit.
“We believe this new power will enhance ASIC’s ability to make proactive interventions in response to financial products that deliver poor consumer outcomes, irrespective of whether the financial firm has complied with legislative or regulatory requirements.”
The EDR scheme has also called for greater input in the administration of ASIC’s new powers, stating that it could help gather intelligence from its experiences with complainants to better inform the regulator.
“There is potential for AFCA to act as a facilitator in informing ASIC of problem areas within the financial services industry that may warrant intervention using the product intervention power,” Mr Locke said.
“This could be achieved though intelligence gathering, informed by our complaints handling processes and experience, and our systemic issues and serious contravention reporting functions.”
The period of consultation regarding the administration of ASIC’s new powers has now closed, with the regulator aiming to release its final regulatory guide next month (September 2019).
AFCA to name and shame
Earlier this week, AFCA also announced that it would begin naming financial firms in its published determinations to “increase transparency in the financial sector” and “enhance consumer confidence”.
Before implementing the change, AFCA undertook a public consultation and submitted an application to ASIC for an amendment to its rules – the application was subsequently approved.
Following the announcement, Mr Locke said AFCA is committed to being “open, transparent and accountable to the public”.
“AFCA plays an important public role and we recognise that transparency in our data and decisions is essential to rebuilding trust in the financial sector,” he said.
“We already publish decisions on our website, but we have been unable to name the financial firms involved.
“We welcome ASIC’s approval to change our rules, which will allow us to now name financial firms in decisions we publish on our website.”
He concluded: “This is an important change, and the public will now be able to access increased information about the actions of financial firms.”
AFCA is working with ASIC to determine the start date for the naming of financial firms.
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Charbel Kadib is the news editor on The Adviser and Mortgage Business.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.