design and distribution obligations

In a review of financial product issuers’ compliance with requirements meant to ensure complex and high-risk investments are kept out of the wrong hands, the regulator found room for improvement – and reminded issuers of its enforcement powers.

The regulator, which is cracking down on financial product issuers for violating requirements and obligations around how they market to investors, issued its first stop order over a superannuation product, temporarily closing Spaceship Super to new investments.

The regulator has issued 26 stop orders against 18 companies for failing to adequately target financial products to the appropriate market since the “design and distribution obligations” regime began, it said in an initial compliance review. And it warned that closer scrutiny is coming.

The corporate regulator reports it has issued 21 stop orders against companies over marketing of financial products since new design and distribution obligations went into effect last October, with the rate of enforcement picking up in recent months.