The Australian Securities and Investments Commission (ASIC) has published updated regulatory guidance on the prohibition of hawking financial products.
ASIC’s updated regulatory guide (RG 38) reflects the reforms to the anti-hawking regime under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020.
These reforms, which take effect on 5 October 2021, are designed to tackle the damage arising from consumers being approached with unwanted products through cold calls or other unsolicited contact.
Under the prohibition, a person must not offer a financial product to a retail client in the course of or because of unsolicited, real-time contact. A consumer must consent to be contacted and that consent must be positive, voluntary and clear.
ASIC deputy chair Karen Chester says: “These changes put in place fairness protections, so consumers are not sold products they don’t want or don’t need. The restrictions mean consumer needs will be central to how firms offer products.
“The new hawking prohibition addresses long-held concerns about poor consumer outcomes from unsolicited sales of financial products. ASIC’s 2018 review of unsolicited life insurance sales calls revealed poor sales conduct and poor consumer outcomes, with 40 per cent of consumers feeling under pressure to buy a product.
“This led to recent criminal proceedings for the hawking of life insurance and to date ASIC has helped secure over $250 million in consumer remediation for consumer credit insurance and life insurance.”
Chester says the new laws will help ASIC to better tackle poor conduct by companies. However, ASIC recently said it will take a reasonable approach in the initial stages of the range of new obligations, provided industry participants are using their best efforts to comply.