1 October 2021

Additional Banking, Superannuation and Financial Services Royal Commission reforms take effect

Consumers and small businesses will benefit from additional protections with the commencement of a further nine recommendations of the Banking, Superannuation & Financial Services Royal Commission and the Design and Distribution Obligations (DDO) from October 2021.

These reforms strengthen protections for consumers by:

  • strengthening the unsolicited selling (anti-hawking) provisions, including for superannuation and insurance products, to prevent pressure selling to consumers (Recommendations 3.4 and 4.1);
  • introducing a deferred sales model for add-on insurance products, to promote informed purchasing decisions and prevent inappropriate sales of those products (Recommendation 4.3);
  • replacing the duty of disclosure regime with a duty to take reasonable care not to make a misrepresentation, ensuring valid claims cannot be declined for inadvertent failures to disclose information by consumers (Recommendation 4.5);
  • strengthening breach reporting requirements for financial service licensees in the Corporations Act 2001 and introducing a breach reporting regime for credit licensees under the National Consumer Credit Protection Act 2009 (Recommendation 1.6, 2.8, 2.9 and 7.2);
  • requiring Australian financial services and credit licensees to provide reference checks, ensuring consistent practices throughout the industry for sharing relevant employment information about financial advisers and mortgage brokers (Recommendation 2.7); and
  • implementing the new DDO to help consumers obtain more appropriate financial products by requiring issuers of financial products to determine an appropriate target market for these products, followed by issuers and distributors being required to sell their products accordingly.

The Morrison Government remains committed to completing implementation of the recommendations of the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and in doing so ensuring Australians continue to have trust and confidence in a strong and effective financial system.