The Australian Securities and Investments Commission (ASIC) has released a regulatory guide on its product intervention powers, while stressing the importance of the new rules amid the COVID-19 pandemic.

“The availability of this power to protect consumers from products that result in significant harm is particularly timely now, when so many are facing uniquely challenging circumstances,” Deputy Chairman Karen Chester said today.

ASIC has already used the power, legislated by Federal Parliament last year, in relation to a short-term credit product and has consulted on its use in other areas.

“The power enables us to confront, and respond to, harms in the financial sector in a targeted and timely way,” Ms Chester said. “But there are important checks and balances, it is a temporary intervention power and we must consult before each and every use.”

Ms Chester says that over time the targeted solving of problems through product intervention may result in less regulation of industry overall.

ASIC received 28 responses to a consultation power on the regulatory guidance, including submissions from the Insurance Council of Australia (ICA), Australian Financial Complaints Authority and consumer groups.

Financial industry groups including ICA submitted that ASIC should confidentially engage with firms before publishing a proposed product intervention order.

In its response, ASIC says it expects that firms would be aware of its concerns through the course of its regulatory work, before it consults on a proposed product intervention order, and any market sensitive consultation document wouldn’t be published when securities markets are trading.

“There is significant public interest in ensuring that consumers and the broader community are aware of and informed about action taken by us,” the response says.

“As a result, we will generally publish a media release on our website to accompany any proposed or final product intervention order.”

Regulatory Guide 272 sets out the scope of the power, including products that can be subject to an intervention and the types or orders ASIC may consider.

It outlines when and how ASIC may exercise the power, including how it may determine when consumer detriment is significant and the ways it may intervene.

Other issues addressed include consultations with affected parties and processes for orders to be extended, amended or revoked, and the consequences of breaching an order.

The guide is available here.