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Medcraft pushes for product intervention powers

ASIC chairman Greg Medcraft has restated the case for product intervention powers for the corporate regulator, as recommended by the Financial System Inquiry.

Speaking at the Banking and Financial Services Law Association conference in Brisbane last month, Mr Medcraft said regulators across the world are looking to expand their "toolkits".

"The International Organization of Securities Commissions (IOSCO) has recommended that regulators look across the financial product value chain, rather than simply disclosure at the point of sale," Mr Medcraft said.

"In the United Kingdom, the Financial Conduct Authority [the UK equivalent of ASIC] has a product intervention power in place."

An intervention power, as recommended by David Murray's Financial System Inquiry, would provide ASIC with a "greater capacity to apply regulatory interventions in a timely and responsive way".

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"It would allow ASIC to intervene in a range of ways where there is a risk of significant consumer detriment," he said.

Mr Medcraft denied that such a power would be used to ban products, stifling innovation as a result.

"In fact, banning products would be very rare and would only occur in the most extreme circumstances," he said.

"We might be able to require amendments to marketing materials, or additional warnings. In more extreme cases, we might be able to require a change in the way a product is distributed or, in rare cases, ban a particular product feature.

"We agree that the use of intervention powers by ASIC would naturally need to have transparency, clear parameters and accountability mechanisms," Mr Medcraft added.

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