ASIC has warned that it will not be a defence against a charge of breaching the new anti-hawking rules that there was no product sale or that the consumer was given time after the offer to consider their decision.
“The prohibition applies to the making of offers, requests or invitations, not the sale or issue that may result,” ASIC said in its hawking prohibition regulatory guide (RG 38).
Under the anti-hawking provisions of the Corporations Act, which take effect today, a person must not try to sell a financial product in the course of unsolicited contact with a retail client or invite the client to apply for financial products.
The law covers the issuer of a financial product and their representatives.
If the hawking prohibition is breached, a consumer has the right to cancel any financial product sold and receive a refund.
Unsolicited contact can be by phone, face-to-face or “any other real-time interaction”, such as instant messaging and chat-bots.
The prohibition may still apply to offers, requests, or invitations that take place through a medium other than one that is a real-time interaction. For example, emailing a consumer an offer during or directly after an unsolicited outbound sales call with them would likely be ‘because of’ that call.
The prohibition does not apply to advertising, marketing emails or letters.
In order to make an offer in relation to a financial product, an offeror must receive consent from a consumer to contact them. The consent must be “clear and voluntary” and must be given before the start of any contact.
Once consent is given, the contact must related to the financial product specifically consented to and be by the method of communication set out in the consent. Consent can be withdrawn at any time.
There are a number of exemptions. Offers that relate to “basic banking products” are exempt. The example of a basic banking product ASIC provides in the regulatory guide is a deposit account.
Offers related to listed securities or listed managed investments are exempt. The prohibition does not apply to offers made in the course of giving personal financial advice.
In some cases, clients may need to be contacted in relation to product renewals. The client can be contacted so long as they held the product to be renewed within 30 prior to the offer.
Other exemptions include offers related to crowd-sourced funding offers, employee share schemes, medical indemnity insurance provided to a medical professional and litigation funding arrangements.