Anti-hawking exceptions regulation

The Financial Sector Reform (Hayne Royal Commission Response) (Hawking of Financial Products) Regulations 2021 have been registered to amend the Corporations Regulations 2001 to insert exceptions to the hawking prohibition in circumstances where a consumer is expected to have enough knowledge to adequately assess the suitability of the product or where another part of the law already provides a consumer with adequate protection from being hawked a financial product.

The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 amends the Corporations Act from 5 October 2021 to provide that a person cannot offer to sell or issue a financial product to a consumer unless if the offer is made in the course of, or because of, unsolicited contact with the consumer.

New regulation 7.8.21A provides for a number of exceptions to the new hawking prohibition in section 992A of the Corporations Act.

An offer, request or invitation will not breach the hawking provisions if it is made in the course of contact that was initiated by the consumer for any purpose and the offer, request or invitation relates to:

  • a basic banking product; or
  • a term deposit with a maximum term of 5 years if the consumer can withdraw funds during that 5 years by providing the product issuer with 31 days or less notice.

Contact is consumer initiated if the consumer takes positive steps to contact the offeror and the contact is not made in response to previous contact initiated the offeror (e.g. returning a missed phone call).

Regulation 7.8.21A also provides that the hawking prohibition does not apply to:

  • Offers relating to listed securities or listed interests in managed investment schemes made by financial services licensees over the phone;
  • Offers for the issue or sale of securities made by a financial services licensee through whom the client has bought or sold securities in the last 12 months;
  • Offers for the issue or sale of interests in managed investment schemes made by a financial services licensee through whom the client has acquired or disposed of an interest in a managed investment scheme in
    the previous 12 months;
  • Crowd Source Funding offers;
  • Offers, invitations or requests relating to employee share schemes;
  • Offers of medical indemnity insurance which are made to healthcare or medical professionals;
  • Offers, requests or invitations in relation to interests in insolvency litigation funding schemes and litigation funding arrangements;
  • Offers for the issue or sale of a financial product that is substantially similar to a financial product that the consumer already holds with the offeror (such as offers to renew an insurance policy).

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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