ASIC has expanded its comments in RG 271 relating to ASIC’s expectations of financial firms in their dealings with paid consumer representatives – including debt-management firms.

RG 271 clarifies when ASIC would consider it to be appropriate for a financial firm not to engage with a paid representative. This includes circumstances where a financial firm reasonably believes that a paid representative is not acting in the best interests of the consumer.

ASIC’s guidance also makes it clear that if AFCA has excluded a paid representative from representing a consumer in relation to a complaint under the AFCA Rules, this would also be an acceptable reason for a financial firm to no longer engage with the paid representative, for the duration of the exclusion period.

If financial firms cease to engage with a paid representative by relying on the updated guidance in RG 271, ASIC says financial firms:

• should clearly explain to a consumer why contact is being made directly and provide reasonable time to respond; and
• can continue to communicate with a consumer directly, even if the consumer still expresses an intention to retain the paid representative.

ASIC is currently considering technical updates to Regulatory Guide 96 Debt collection guideline: for collectors and creditors (RG 96), and intends an amendment to the section on ‘when a debtor is represented’ to ensure consistency with RG 271.

In the interim, financial firms can engage with paid representatives in a manner that is consistent with RG 271 and its further comments.

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