The Australian Securities and Investments Commission (ASIC) has released a new regulatory guide on the new “game-changing” financial product design and distribution obligations passed by Parliament in 2019 following a recommendation of the Financial System Inquiry.
The design and distribution obligations require financial services firms, including insurers, to design financial products that meet consumer needs and distribute them in a more targeted manner.
Following a lengthy consultation this year, ASIC has published a guide to help companies prepare for the rules to take effect on October 05, 2021. It details the coverage of the rules, product governance arrangements required by issuers and distributors to ensure that they comply with the rules, specific obligations for issuers and distributors, and a range of administrative powers that ASIC has concerning the obligations and its approach to the granting of relief from the obligations.
ASIC acting chair Karen Chester described the obligations as a “game-changer” as they were “designed to embed a consumer-centric approach and assist the industry in delivering better outcomes for consumers while managing non-financial risks and avoiding costly remediation.”
“ASIC's guidance was greatly enhanced by the valuable input received from industry through an extensive consultation process,” she said. “Engagement with industry was particularly important as the obligations require firms to set their own boundaries to suit their business, products, and customers. If they stay within these boundaries, this will mean less enforcement action from ASIC and the opportunity for deregulatory initiatives over time.”
