The Australian Securities and Investments Commission (ASIC) has initiated consultation on the proposed administration of its new product intervention power which allows the regulator to intervene and take temporary action where insurance and other financial products have resulted in or are likely to result in, significant consumer detriment.

The regulatory guide “Product intervention power “ sets out the scope of the power, when and how ASIC expects to use it and how a product intervention order is made. ASIC can take a range of temporary actions including banning a product or product feature, imposing sale restrictions, amending product information or choice architecture.

Announcing the consultation, ASIC deputy chair Karen Chester said, “The product intervention power is an incredibly important addition to ASIC’s regulatory toolkit. ASIC can now step in and respond to significant consumer detriment in a targeted and timely way. But there are also important checks and balances – it is a temporary intervention power and we must consult before each and every use.”

The product intervention power is not a new concept. Australia is joining regulators in other jurisdictions like the US, the UK, the EU, Hong Kong and Taiwan with product intervention powers, Ms Chester said.

ASIC is required to consult before making a product intervention order.

“ASIC having this power was recommended by the 2014 Financial System Inquiry, supported by the Financial Services Royal Commission, consulted on and agreed to by the government and received overwhelming support across the Parliament in April this year,” Ms Chester said.

The product intervention power was enacted in April 2019 with new design and distribution obligations. The product intervention power is available for ASIC to use now. The design and distribution obligations do not apply to industry until April 2021.