The Australian Securities and Investments Commission (ASIC) says it is ready to use its new product intervention powers even when there have not been breaches of the law.

The Power Regulatory Guide, released last week, says there could be cases where disclosure requirements and design and distribution obligations in the Corporations Act have been complied with, but where action is still required.

“We can make a product intervention order if we are satisfied that a product, or class of products, has resulted, will result, or is likely to result in significant consumer detriment,” the guide says.

McCabe Curwood Insurance Advisory Principal Mathew Kaley says the potential for action when there is full legal compliance highlights regulatory environment changes.

“That position is, in itself, an illustration of how far regulation has moved in recent years, from a focus on disclosure and compliance to one of customer needs, expectations and outcomes,” he says.

Intervention orders could see products, or particular features of products banned, either on an individual or market-wide basis.

ASIC has also indicated that it intends to be publicly transparent about interventions, but expects firms to be aware of its concerns through the course of its regulatory work, before it consults on a proposed orders.

“Transparency and disclosure are important factors in market integrity and investor confidence, and serve to promote deterrence as well as to educate,” it says.

A person or firm that contravenes a product intervention order could be subject to enforcement action through civil penalty proceedings or criminal prosecution.

ASIC Deputy Chairman Karen Chester says the product intervention power is “an incredibly important” addition to the regulatory toolkit.

“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 with the impact of COVID-19,” she said.

The guide is available here.