ASIC has published its updated regulatory guide on the hawking prohibition (RG 38) which gives its views on the expanded anti-hawking regime under sections 992A and 992AA of the Corporations Act which commence on 5 October 2021.
Under the prohibition a person must not offer a financial product to a retail client in the course of or because of unsolicited, real-time contact. A consumer must consent to being contacted, and that consent must be positive, voluntary and clear. Background.
The revised hawking prohibition covers a range of products, including superannuation and insurance products.
The final RG38 contains 30 examples of application of the prohibition.
The hawking prohibition is technology neutral, and ASIC’s guidance demonstrates how it considers the hawking prohibition will apply across a variety of media.
RG38 includes an example involving an in-app pop-up as well as references to chat-bots and artificial intelligence.
What is “real-time”?
RG38 also discusses whether text messages constitute real-time interactions for the purposes of section 992A(4). Some exchanges through text message may be in the nature of a discussion or conversation and create an expectation of an immediate response, while others may not.
RG38 notes that if a consumer’s consent indicates a particular form of contact, an offeror may only contact the consumer in that form.
What is a prohibited offer?
There is a discussion about the differences between information-giving practices and the making of an offer, request or invitation.
ASIC also observes that clarifying the scope of a consumer’s consent would be unlikely to amount to a breach of the hawking prohibition.
ASIC says it is possible that a consumer’s consent may be broad enough so as to reasonably apply to more than one product.
For example a product could be within scope of the consent if it is so closely related to the product that the consumer consented to being contacted about that the consumer would reasonably expect to be offered that other product.
Establishing if a financial product is ‘so closely related to an [initial] product that a consumer would reasonably expect to be offered it’, may involve considering factors such as whether and to what extent the product manages financial risk arising from acquiring the initial product (such as house insurance when discussing a home loan).
An offeror can provide information in relation to the additional product, so long as no offer, request or invitation in relation to the product is made, and the consumer is left to consider whether they wish to recontact the offeror.
Hawking and DDO
ASIC says that, in relation to the product design and distribution obligations (Part 7.8A of the Corporations Act), it is possible for an issuer to prepare a single target market determination (TMD) for a bundle of products. For example, as a result of s764(1A) and (1B), home building insurance and home contents insurance will be two separate products but may have a single TMD where they are offered as part of bundle.
With respect to bundled products ASIC says that whether or not the products are independently obtainable, the relevant test remains that the consumer’s consent reasonably applies to each of the products offered.
Consent given by a consumer for the purposes of the hawking prohibition may not extend to the whole bundle of products, even where that bundle is dealt with in a single TMD. ASIC says the housing of two or more products within a single TMD does not impact the nature of a consumer’s consent.
Hawking and add-on insurance
RG38 confirms that where an add-on insurance product is exempt from the deferred sales model regime, the hawking regime will apply to it.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.