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ASIC’s new reforms to the financial services industry

Six reforms will be implemented from October 2021, following recommendations from the royal commission into misconduct in banking, pensions and financial services and other investigations.

The new reforms and their start dates are as follows:

reform namestart date
Personal Documentation Review and Information Sharing Requirements for Financial Advisors and BrokersOctober 1, 2021
Violation Reporting and “Notify, Investigate and Remediate” ResponsibilitiesOctober 1, 2021
Design and distribution obligationsOctober 5, 2021
Restrictions on the unsolicited sale of financial products (touting)October 5, 2021
Deferred sales model for additional insurance productsOctober 5, 2021
Internal Dispute ResolutionOctober 5, 2021

The peddling reforms will give consumers more control over what products are offered to them and prevent consumers from being exposed to unwanted products over the phone or through other unsolicited contacts.

The reforms were enacted to provide consumers with long-term protection from the harms highlighted by the Royal Commission and to close previously existing regulatory gaps. The purpose is:

  • Consumer-centric product design is at the heart of the business model, and the target market is more transparent;
  • Reduce sales that occur when consumers are under pressure;
  • Increase the transparency of what goes wrong, in the form of complaints and the number of violations;
  • Be more consumer-centric and handle complaints in a timely manner.

The reforms will also provide ASIC with greater visibility into market issues through breach reporting, complaints data and data available under design and distribution obligations. This will help ASIC identify problems earlier and resolve them faster, reducing reliance on disclosures to address consumer harm. For more info, click here