ASIC calls for greater powers to deal with SMSF promoters
In response to some of the findings of the royal commission, ASIC has called for further powers and extensions to existing proposals, including additional obligations for promoters of SMSFs.
In its submission to the interim report of the royal commission, ASIC said the proposed reforms to its powers and available penalties – including increases to maximum civil penalties, increased product intervention powers, and new design and distribution obligations – will all be critical for the prevention of misconduct.
It has also called for further powers and extensions to these proposals. One of these proposals is to extend the design and distribution obligations to credit products regulated under the National Consumer Credit Protection Act 2009 and “to promoters of SMSFs”.
The design and distribution obligations are contained in the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018, which is currently before the House of Representatives.
The obligations were a recommendation by the Financial System Inquiry and are designed to help consumers select appropriate financial products by requiring issuers and distributors to have a customer-centric approach to designing, marketing and distributing financial products.
Under the current proposals before Parliament, the obligations will generally apply to offers of financial products that require a disclosure document, such as a product disclosure statement or prospectus, according to the explanatory memorandum.
Civil and criminal penalties are also intended to apply where the obligations are contravened.
In addition to promoters of SMSFs, ASIC also wants to extend these design and distribution obligations to products regulated only under the ASIC Act, including funeral expenses policies, some extended warranties, short-term credit exempted from the national credit laws and buy now pay later arrangements.