The scope of financial services and credit regulation has widened

The commencement of ASIC’s new product intervention powers means that if you are a provider or distributor of any retail financial product, which now includes both regulated and unregulated credit, ASIC has powers in addition to its regulation of licences.

I am regularly asked whether the provision of a particular product would require a financial services licence or a credit licence, if the enquirer does not already hold a licence, or a new authorisation, if they already have a licence.

The uncertainty has arisen because of the number of carve-outs and legacy products that have been given special conditions in the Corporations Regulations and Credit Regulations.

Some organisations also have an exemption for constitutional reasons or because they or their customers are specifically exempt.

The commencement of ASIC’s product intervention powers on 6 April 2019 and financial product providers’ obligations in respect of design and distribution of financial products on 6 April 2021 means that ASIC has new powers in respect of a wide range of financial products and credit facilities whether or not they have special exemptions under the Corporations Act or the National Credit Act .

ASIC’s product intervention power will enable it to prevent or respond to significant consumer detriment in relation to both financial and credit products.

This means the test for new products is not just whether they need to be licensed or authorised but whether they will provide a benefit for consumers or cause them loss, for example by charging a fee for a product which provides no benefit.

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