A raft of major reforms in the financial services sector have come into effect this week, the culmination of years of consistent campaigning and casework from consumer advocacy groups representing hundreds of people across the country harmed by financial malpractice.
The changes include the following:
- Shortening of the maximum time a firm has to respond to a complaint from a customer from 45 to 30 days, and clarification of obligations where complaints lodged by a representative or debt vulture.
- An expanded ban on unsolicited selling of financial products, including insurance and superannuation.
- The commencement of ‘design and distribution obligations’ requiring issuers and distributors of financial products to develop and maintain effective product governance arrangements across the product life cycle. The goal is to ensure consumers receive products consistent with their likely objectives, financial situation and needs, including making ‘target market determinations’.
- A four-day ‘deferred sales model’ for add on insurance.
“October is turning out to be a great month for consumers with these long-awaited reforms finally coming into effect,” said Gerard Brody, CEO of Consumer Action.
“Consumer advocates have been campaigning for years to get these changes made to protect the community from junk insurance sales, high pressure cold calling and poor product design. We are very pleased to see these reforms coming into effect, as they will benefit consumers and help to improve conduct in the financial services sector.”
Consumer Action represented a number of people who gave evidence to the Banking Royal Commission about their harmful experiences with the financial services sector.
“It was the evidence of harm presented at the Banking Royal Commission that was the crucial turning point in getting these reforms through. I would like to thank our clients for their courage and willingness to share their stories to help others,” Mr Brody said.