Product intervention will not harm innovation, says ASIC

by Julia Corderoy07 Sep 2015
ASIC says giving the regulator product intervention power, which would include the power to ban products, will not stifle innovation and competition.

In a speech to the Banking and Financial Services Law Association annual conference in Brisbane last week, ASIC chairman Greg Medcraft said regulators globally are looking for a broader toolkit to address market problems, including moving away from purely disclosure-based regulation.

“For example, the International Organization of Securities Commissions (IOSCO) has recommended that regulators look across the financial product value chain, rather than simply disclosure at the point of sale. In the United Kingdom, the Financial Conduct Authority has a product intervention power in place,” he said.

According to ASIC, product intervention power would give it greater capacity to apply regulatory interventions in a “timely and responsive” way. The regulator says the power would extend to a range of actions, including simple “nudges”, right through to product bans.

Since ASIC deputy chairman Peter Kell earlier this year told the Centre for International Finance and Regulation that the regulator should be granted powers for proactive product intervention, many lenders expressed fears it could stifle innovation. However, Medcraft says this is not the case.

“We think that such a power would not stifle innovation that has a positive impact on consumers. In fact, banning products would be very rare and would only occur in the most extreme circumstances. Both industry and regulators have a common interest in seeing innovation that fosters investor and financial consumer trust and confidence – innovation that helps investors, but does not harm them.

“Most interventions would likely fall well short of product banning. For example, we might be able to require amendments to marketing materials, or additional warnings. In more extreme cases, we might be able to require a change in the way a product is distributed or, in rare cases, ban a particular product feature.”
 

COMMENTS

  • by South Coast Broker 7/09/2015 10:11:29 AM

    ...but are we confident that ASIC has the experience and product knowledge, or even a sufficient market understanding, to make these decisions.

  • by Really?...... 7/09/2015 11:02:50 AM

    And so it begins...............

    Public servants now in control of industries they've never worked in.

    Eaxctly how most disasters have begun around the world in financial markets.

  • by Regional Broker 7/09/2015 11:43:04 AM

    "product Intervention or Banning would be very rare " < Oh Really there are the people who last week made outlandish statement about loan defaults being higher in the third party channel as opposed to Bank Direct channel which was WRONG . Can we trust these people to come up as well researched and educated NO NO NO