ASIC Product Intervention Powers: Part 7.9A Complete Guide
ASIC's product intervention power is one of the most significant regulatory tools introduced following the Hayne Royal Commission. Under Part 7.9A of the Corporations Act 2001, ASIC can ban or restrict financial products that cause significant detriment to retail clients without needing to prove individual misconduct.
What Is the Product Intervention Power?
Introduced by the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019, the product intervention power enables ASIC to:
- Ban the issue, distribution, or provision of a financial product
- Restrict specific features, terms, or distribution channels
- Impose conditions on how products are offered or marketed
Orders last up to 18 months, with extension possible through a new order or permanent legislative change.
The Significant Detriment Test (s 1023E)
ASIC must be satisfied the product has resulted in, or will or is likely to result in, significant detriment to retail clients. Key factors include:
- Nature and extent of the detriment
- Whether detriment is actual or potential, and its likelihood
- Impact on the retail client
- Whether the product targets vulnerable consumers
Major Product Intervention Orders
| Product | Year | Action | Impact |
|---|---|---|---|
| Binary Options | 2021 | Total ban (retail) | 80% of retail clients lost money; avg $6,400 loss |
| CFDs | 2021 | Leverage limits, negative balance protection | $2.1B aggregate retail losses prevented |
| Short-term credit | 2022-24 | Restrictions on high-cost arrangements | Effective APRs exceeding 400% targeted |
BNPL and Emerging Product Risks
Buy-now-pay-later was brought under credit regulation through the Treasury Laws Amendment (Responsible Buy Now Pay Later) Act 2024. ASIC retains the ability to use its product intervention power for any BNPL features causing significant detriment beyond the new regulatory framework.
The Intervention Process
- Consultation: ASIC publishes a consultation paper (minimum 21 days for submissions)
- Interim order: ASIC may make an interim order (up to 10 months) before finalising
- Final order: After considering submissions, ASIC makes a final order (up to 18 months)
- Extension: ASIC may seek a new order or recommend permanent legislative change
Interaction with DDO
Product intervention works alongside Design and Distribution Obligations. While DDO requires designing products for defined target markets, the intervention power is ASIC's backstop when DDO alone does not prevent consumer harm. A DDO-compliant product can still face intervention.
How Compliance Teams Should Prepare
- Monitor ASIC publications: Track consultation papers, media releases, and intervention reports
- Product detriment register: Assess potential consumer detriment for each product
- Complaint analysis: Analyse complaint trends as early warning indicators
- Peer comparison: Monitor intervention orders against competitors
- Board reporting: Include product intervention risk in regular Board risk reports
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