The Treasury Laws Amendment (2021 Measures No. 4) Bill 2021 has been passed by the House of Representatives and introduced into the Senate to provide that ASIC is not prohibited from making a product intervention order that has conditions relating to fees, charges or other consideration payable by a retail client or consumer in relation to a financial product or a credit product.
UPDATE 24 June 2021: Bill has been passed by both houses and is awaiting Royal Assent.
UPDATE: Royal Assent given on 30 June 2021.
Currently paragraph 1023D(4)(c) of the Corporations Act 2001 and paragraph 301D(4)(c) of the National Consumer Credit Protection Act 2009 contain a prohibition that prevents ASIC from making a product intervention order with a condition relating to a person’s remuneration.
The Bill’s Explanatory Memorandum states that the prohibition was only intended to limit ASIC’s ability to make a product intervention order relating to remuneration of individuals who are employees or agents of a financial product provider or a credit product provider (such as wages).
However, the prohibition may inadvertently capture remuneration received by a financial product provider or a credit product provider or their associates from a retail client or consumer, if a broad interpretation was given to ‘a person’s remuneration’ in the provision.
If this were the interpretation, ASIC would be unable to make a product intervention order to regulate fees, charges or other consideration paid by a retail client or consumer to these entities for the provision of a financial product or a credit product.
The Bill ensures that ASIC has the ability to intervene in relation to the costs of a financial and credit product (such as administrative fees, interest charges, surcharges, or default fees) paid by a retail client or consumer, through the use of a product intervention order by excluding fees, charges or other consideration paid or payable as remuneration by retail clients or consumers from the prohibition.
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Author: David Jacobson
Principal, Bright Corporate Law
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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.
