Tougher ASIC to challenge financial services product development in 2015: Hall & Wilcox

A tougher ASIC will require financial services firms to think harder about their products and compliance systems during 2015, according to leading independent law firm Hall & Wilcox.

Harry New, a Partner at Hall & Wilcox, said the regulator is looking to intervene and make examples where they can. “Financial services firms need to be aware that ASIC is becoming less reactive and more proactive.

“On the product side in particular the regulator is becoming more interventionist and looking for the low hanging fruit.

“Financial services needs to get on the front foot to ensure their products, compliance system and culture is able to meet that increased scrutiny.”

Mr New said the tougher response was inevitable following high profile inquiries and reports into ASIC’s performance, CBA Financial Planning, the life insurance industry and agribusiness investment schemes during 2014.

Some reports suggest the government is considering giving ‘product intervention powers’ to ASIC, which may allow it to remove or ban financial products, change marketing documents, add consumer warnings, change labelling or terminology and impose distribution restrictions (“ASIC may get power to ban”, Australian Financial Review, 2 February 2015).

He said that market integrity is paramount but there needs to be a balance between reasonable regulation and the ability for the free market to innovate. “If there is too much power to intervene into product design, it may stifle innovation and increase compliance costs.”