All the participants in the financial services food chain need to be made accountable for their actions so that product manufacturers cannot blame planners or vice versa, according to the Australian Securities and Investments Commission (ASIC).
ASIC deputy chairman, Peter Kell has told Senate Estimates that he believes this is something that can be achieved via the new product intervention powers being granted to the regulator.
Discussing the powers being granted to ASIC, particularly the product governance power and the so-called design and distribution obligation, Kell said it was in many ways a reflection of the fact that “for too long in financial services different parts of the supply chain—whether it was the product manufacturer or the adviser or whatnot—would point the finger at each other if something went wrong”.
“’Oh, no, that was a problem with the product,' or, 'No, that was a problem with the advice,' or, 'That was a problem with the sales process.',” he said.
“The benefit of the design and distribution obligation is that it makes it very clear that there's nowhere to hide, that the industry has to take collective responsibility and collectively raise standards to ensure that all the players in the supply chain focus on the needs of consumers, focus on the needs of the end users, and are responsible for ensuring that the products are appropriately designed and end up in the right hands,” Kell said.
The ASIC deputy chairman acknowledged the existence of industry nervousness about the new product intervention arrangements but said he believed the new regime had to be tough if it was to be effective.
“From ASIC's perspective, we have to have a robust product intervention power. It has to be something that actually will meet the expectations of the community; otherwise, we're going to have difficulties. So our view is that it does have to be a power that has teeth,” Kell said. “Obviously that will make some in the industry a bit nervous, but the accountability mechanisms will be there, in our view.”