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CORPORATIONS ACT 2001 - SECT 1023D

ASIC may make product intervention orders

Making product intervention orders

             (1)  Subject to subsection (5), if ASIC is satisfied that a financial product:

                     (a)  is, or is likely to be, available for acquisition by issue, or for regulated sale, to persons as retail clients (whether or not it also is, or is likely to be, available for acquisition by persons as wholesale clients); and

                     (b)  has resulted in, or will or is likely to result in, significant detriment to retail clients;

ASIC may, in accordance with this Part, order that a specified person must not engage in specified conduct in relation to the product, either entirely or except in accordance with conditions specified in the order.

Note 1:       An example of conditions that may be specified in a product intervention order include that the product not be issued to a retail client unless the retail client has received personal advice.

Note 2:       Section 1023E specifies matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients.

Note 3:       Section 1023N also provides that product intervention orders may include requirements for notifying retail clients.

             (2)  An order under subsection (1) is not a legislative instrument.

             (3)  Subject to subsection (5), if ASIC is satisfied that a class of financial products:

                     (a)  is , or is likely to be, available for acquisition by issue, or for regulated sale, to persons as retail clients (whether or not it also is, or is likely to be, available for acquisition by persons as wholesale clients); and

                     (b)  has resulted in, or will or is likely to result in, significant detriment to retail clients;

ASIC may, in accordance with this Part and by legislative instrument, order that a person must not engage in specified conduct in relation to the class of products, either entirely or except in accordance with conditions specified in the order.

Note 1:       An example of conditions that may be specified in a product intervention order include that a product in a class of products not be issued to a retail client unless the retail client has received personal advice.

Note 2:       Section 1023E specifies matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients.

Note 3:       Section 1023N also provides that product intervention orders may include requirements for notifying retail clients.

Restrictions on product intervention orders

             (4)  A product intervention order must not specify any of the following f or subsection (1) or (3):

                     (a)  a condition that a person satisfy a standard of training, or meet a professional standard, other than a standard otherwise prescribed for the person by or under this Act;

                     (b)  a condition that a person who is not required to hold an Australian financial services licence become a member of an external dispute resolution scheme;

                     (c)  a condition related to a person's remuneration, other than a condition related to so much of the person's remuneration as is conditional on the achievement of objectives directly related to the financial product.

             (5)  Conduct covered by a product intervention order must be limited to conduct in relation to a retail client.



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