AFCA Welcomes ASIC Product Intervention Powers

The Australian Financial Complaints Authority (AFCA) issued a statement on Tuesday saying that it has "strongly welcomed" the product intervention powers that have been handed to the Australian Securities and Investments Commission (ASIC).

That announcement seems to be a thinly veiled reference to new regulations announced by the Australian regulator last week.

ASIC has said that it plans to bring in rules that largely mimic laws introduced a year ago by the European Securities and Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term). Binary options will be banned and Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term on contracts-for-difference (CFDs) will be restricted.

In fact, the Aussie regulator has gone further than ESMA. The European regulator permitted a maximum of 30:1 leverage. Assuming the regulations go into effect, ASIC will only be allowing traders to access leverage of 20:1.

Alongside the bans on leverage will be restrictions on marketing. Welcome bonuses will, for example, no longer be allowed in Australia.

Better for consumers

And the AFCA, which provides dispute resolution services to retail clients, said that the product intervention measures given to ASIC will lead to better protection for investors.

“AFCA strongly welcomes the addition of the product intervention power to ASIC’s regulatory toolkit,” said AFCA chief ombudsman and CEO David Locke.

“We believe this new power will enhance ASIC’s ability to make proactive interventions in response to financial products that deliver poor consumer outcomes, irrespective of whether the financial firm has complied with legislative or regulatory requirements.”

The AFCA's comments come a day after the agency said that it will be publishing the names of firms involved in dispute resolution processes.