A bill clarifying ASIC’s product intervention power in relation to fees and charges paid by consumers was passed last week.
Treasury Laws Amendment (2021 Measures No.4) Bill 2021 includes a provision removing ambiguity about the regulator’s ability to make a product intervention order to regulate fees, charges or other consideration paid by a consumer to a financial product provider for the provision of a financial product or credit product.
The product intervention power allows ASIC to impose conditions on the sale of a financial product, including banning sale, where there is a risk of significant financial detriment to consumers.
The Corporations Act and the National Consumer Credit Protection Act contain a prohibition that prevents ASIC from making a product intervention order with a condition relating to a person’s remuneration.
The prohibition was only intended to limit ASIC’s ability to make a product intervention order relating to remuneration (such as wages) of individuals who are employees or agents of a financial product provider or a credit provider.
However, the prohibition could capture remuneration received by a financial product provider or credit product provider, or their associates, from a consumer, given the broad interpretation of ‘a person’ in the provision.
If that were the case, ASIC would not be able to make a product intervention order to regulate fees, charges or other consideration paid by a consumer for the provision of a financial product or credit product.
The amendment in the bill passed last week removes this ambiguity and ensures that ASIC has the ability to intervene in relation to the costs of a financial or credit product paid by a consumer. It excludes fees, charges or other consideration paid or payable as remuneration by consumers from the prohibition in the Corporations Act and NCCP Act.