ASIC to ‘work with industry’ on 1 October changes

With a slew of new reforms for the financial services sector due to come into effect in October, ASIC has told local operators to expect a period of transition.

ASIC chair Joe Longo emphasised the long-term importance and benefits of a stronger financial system, but acknowledged that the challenges of implementing the changes have been made more difficult as a result of COVID-19 and renewed lockdowns.

As a result, ASIC will follow a more even-handed approach and look to take into account the broader context and challenges arising from the current operating environment.

Enacted in response to the government’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the six reforms cover a broad spectrum of issues.

Generally, they promise to provide ASIC with greater visibility into the sector, allowing them to spot and resolve potential issues more proactively rather than waiting to respond to reports of consumer harm.

Specifically, the reforms will require AFS licensees to notify clients affected by any breaches of the law within a certain time frame. A new reference-checking regime is also being introduced to vet potential advisers.

ASIC said that these new standards will “address longstanding concerns about inconsistent, inadequate and delayed reporting of breaches by licensees”.

The reforms also include new obligations that require issuers of financial products to adopt a “consumer-centric” approach to designing and distributing those products and conform to new restrictions when it comes to how they “hawk” them.

Mr Longo was optimistic about the potential impact of each reform, asserting that the changes will help ensure fairer outcomes for consumers.

“The benefits will increase over time as consumer outcomes become the focus and experience accrues,” he predicted.

For now, though, these long-term expectations are tempered by the realities of the present.

“We want to ensure the reforms are successfully implemented – and that means we will continue to work with industry, and build on the efforts by industry associations and individual licensees in preparing for these reforms,” he said.