Products fail but ASIC likes to spread blame

Mike Taylor

Managing Editor and Publisher

20 April 2026

Financial advisers have been placed on notice that when it comes to financial services products failures the Australian Securities and Investments Commission (ASIC) is not going to give them a free pass.

Answering questions on notice from Senate Estimates, the regulator acknowledged that product failures “have a significant role in consume harm” but then made clear that it also looked more broadly when looking to apportion blame”.

Answering a question from Federal Deputy Opposition Leader and former Minister for Financial Services, Senator Jane Hume, ASIC stated: “For the avoidance of doubt, we agree that major product failures have a significant role in consumer harm”.

But ASIC was quick to add: “However, in our view, attributing primary responsibility for the losses resulting from major product failures to responsible entities without considering other contributions risks discounting the critical roles other entities and individuals play in contributing to consumer harm”.

Referencing its answer to a previous question on notice, ASIC said that “in the context of high risk super switching, as well as other collapses of managed investment schemes, we observe there are often a number of responsible parties whose conduct contributes to consumer harm”.

“Importantly, that includes those involved in the distribution of the financial product to consumers. For example, where financial advisers do not discharge their obligations, and advice licensees do not exercise proper oversight over their advisers, or superannuation trustees fail to undertake appropriate due diligence in offering investment options to members, clients become exposed to the risk of acquiring products that are not appropriate for them, including products that are at high risk of failure”.

Hume had referenced ASIC’s answer to an earlier question in which it stated it does not agree that “greater consumer harm emerges primarily from major product failures”.

Hume had asked what was the basis for this view from ASIC.