Corporate watchdog warns financial sector as new powers loom

THE Australian Securities and Investments Commission has urged the financial sector to get its house in order ahead of the corporate cop gaining new powers to ban potentially harmful products.

ASIC deputy chairman Peter Kell said businesses selling banking, superannuation and insurance products need to review whether they are likely to run foul of new product intervention rules being finalised by the Federal Government.

“Don’t wait for the reforms to come into place – get those processes up to scratch early,” Mr Kell said.

Under the powers, ASIC is expected to be able to ban financial products when there is a “risk of significant consumer detriment”. The regulator will also be able to take action to ensure financial products are being targeted at appropriate customers and crack down on pay arrangements such as commissions which encourage finance workers to push inappropriate products on to consumers.

The powers were first recommended by the 2014 financial system inquiry carried out by former Commonwealth Bank chief and AMP chairman and David Murray. A draft version of the new law was released late last year and remains under review by the government.

The powers are expected to allow ASIC – long criticised as being a toothless tiger – to be more proactive in targeting dodgy behaviour.