Anti-hawking regulation is nothing new, in fact the current regulations came into effect in 2002, and have always (basically) prohibited businesses from offering a financial product through an unsolicited meeting or phone call (unless certain conditions are met).
Commissioner Hayne (you may have heard of him) determined that this didn’t go far enough as, even when the hawker is not ‘unscrupulous’ the consumer is nonetheless ‘unsuspecting’ (scandal…)
This led to consultation paper 346 which, in summary, has led to the following impending changes to the rules (effective from 5 October 2021):
1. Requesting or inviting consumers to apply: While the old regulations prohibited businesses from ‘issuing or selling’ via unsolicited contact, the new regulations extend the regulated conduct to ‘ issuing, selling, requesting or inviting ’ the purchase of a financial product. This will capture some existing practices (for instance re superannuation products) where customers would be invited to apply or enquire, rather than being sold to directly.
2. Defining unsolicited contact: this term is undefined under the existing regulations. Under the changes, it is defined relatively broadly as ‘ contact made by telephone call, face to face meetings, or any other real-time interaction in the nature of a discussion or conversation, that a consumer did not consent to’. This casts a wide net, and reduces the scope for circumventing the regulations on a technicality.
3. 6 week expiration on consent: for contact to be solicited, a consumer must have made a ‘positive, voluntary and clear request to be contacted about the financial product’, and that consent remains valid for only 6 weeks.
In addition, the changes have implications for the sale of add-on insurance products under existing deferred sales models. Insurers can read on here.
Questions? We’re here to chat if you need.
