Uncertainty about ASIC’s power to make orders relating to fees and charges paid by consumers under its product intervention power has been clarified in a bill the government introduced last week.

The product intervention power allows ASIC to impose conditions on the sale of a financial product, including banning sale, where there is a risk of significant financial detriment to consumers.

The Corporations Act and the National Consumer Credit Protection Act contain a prohibition that prevents ASIC from making a product intervention order with a condition relating to a person’s remuneration.

According to the explanatory memorandum accompanying the bill, Treasury Laws Amendment (2021 Measures No.4) Bill 2021, the prohibition was only intended to limit ASIC’s ability to make a product intervention order relating to remuneration (such as wages) of individuals who are employees or agents of a financial product provider or a credit provider.

However, the prohibition may capture remuneration received by a financial product provider or credit product provider, or their associates, from a consumer, “given the broad interpretation of ‘a person’ remuneration” in the provision.

“ASIC would not be able to make a product intervention order to regulate fees, charges or other consideration paid by a consumer to these entities for the provision of a financial product or credit product,” the explanatory memorandum says.

The amendment in the bill removes this ambiguity and ensures that ASIC has the ability to intervene in relation to the costs of a financial or credit product paid by a consumer.

The amendment excludes fees, charges or other consideration paid or payable as remuneration by consumers from the prohibition in the Corporations Act and NCCP Act.

ASIC has had a product intervention power since 2019 and since then has used it deal with short-term lenders seeking to avoid interest cost caps.