ASIC says iExtend model is a financial product
The Australian Securities and Investments Commission (ASIC) has signalled the extent to which it is prepared to encompass derivative offers as financial products by subjecting an enforceable undertaking on iExtend Holdings.
The importance of ASIC’s action is that it deems the iExtend business model to be a financial product.
ASIC said an investigation had revealed that iExtend was offering to pay people’s life insurance premiums in exchange for a portion of the benefit if a claim is made.
It said that to give effect to this arrangement, iExtend acquired interests in life insurance policies by entering into a co-ownership deed with policy holders.
The court-enforceable undertaking entered into by iExtend requires the company to now apply for an Australian Financial Services Licence to issue financial products, to provide general advice and to provide claims handling and settling services.
Reinforcing ASIC’s approach, deputy chair, Sarah Court said firms dealing in financial products had a legal obligation to be licensed.
“The licensing regime requires financial services businesses to meet important disclosure, design and distribution obligations. ASIC has taken this action to ensure that iExtend’s customers are afforded the same protections as for the rest of the industry,” she said
“Anyone dealing in a financial product or providing financial advice must have an AFS licence or be appropriately authorised under an AFS licence unless an exemption applies.”