The Financial Services Royal Commission Response resulted in changes for both bank and non-bank lenders including:
- The design and distribution obligations require firms to design financial products to meet the needs of consumers, and to distribute their products in a more targeted manner.
- The breach reporting reforms seek to address long-standing concerns about inconsistent, inadequate and delayed reporting of breaches by licensees. The reforms will allow ASIC to identify and address emerging trends of non-compliance in industry. Under the new law, industry will be obliged to identify and report breaches and remediate consumers in a more timely manner. The regime is also extended to credit licensees for the first time.
- The deferred sales model introduces a mandatory four-day pause between the sale of a principal product or service and the sale of add-on insurance. The deferred sales model was introduced to address numerous issues in the add-on insurance market, including poor-value products, unfair sales practices and outcomes, and negative claims outcomes compared to other insurance markets.
- The hawking reforms will give consumers greater control over the circumstances in which they are offered products, and prevent consumers being approached with unwanted products on cold-calls or through other unsolicited contacts.
- The reference checking reforms will promote better information sharing about the conduct of financial advisers and mortgage brokers—focusing on compliance, conduct and risk management.
- Updated standards and requirements for internal dispute resolution will assist in improving timeliness of complaints handling, clearer messaging to consumers, and consistent recording of complaints. The updates also clarify the enforceability of ASIC's IDR standards and ensure that firms are identifying systemic issues that arise from complaints.
- Consumer Credit news