ASIC will not ignore ‘lawful’ behaviour
Just because something is lawful doesn’t mean it won’t grab the attention of the Australian Securities and Investments Commission (ASIC) and the use of its proposed product intervention powers.
The regulator has provided documentation to the Senate Economics Legislation Committee explaining that while the product intervention power is intended to allow ASIC to intervene
“prospectively”, that does not mean it will not act where consumer compensation is involved.
“There are some cases where we might intervene in relation to consumer detriment which was caused by conduct that was completely lawful at the time,” ASIC told the committee. “In these cases, we will not be able to go back and declare that such conduct was unlawful and require compensation to be paid. We think this is appropriate.”
However, it said that in other cases it might intervene in relation to “lawful conduct that was driving unlawful conduct” and cited its recent intervention into flex commissions which, while not unlawful, resulted in skewed incentives which drove unlawful and deceptive conduct.
“In such cases, we could intervene prospectively to address the lawful conduct driving the harm (i.e. by banning flex commissions), and in relation to the unlawful conduct, if we can gather evidence of that conduct, then we can seek compensation on behalf of consumers in relation that conduct (i.e. the misleading and deceptive conduct or unconscionable conduct),” ASIC said.
It said that, alternately the consumers impacted by the unlawful conduct could directly seek compensation, either through AFCA or through the courts.
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