Anti-hawking provisions: what will

and won’t fly?

The anti-hawking provisions for superannuation are now in force.
This article covers what the reform means and how it applies..

SuperCPD Trustee | November 2021 Edition LEARNING

Authors

Rosalyn is a partner in Deloitte's Governance, Regulation and Conduct

practice. She specialises in supporting firms to design and assess
frameworks to treat customers fairly, including the development of
conduct, product governance, sales practices and complaints handling
frameworks.
Rosalyn Teskey,
Partner, Governance,
Regulation and
Conduct, Deloitte

Georgia is a Senior Manager in Deloitte’s Governance, Regulation and

Conduct practice. She specialises in supporting clients across financial
services to design, implement and review frameworks, policies and
procedures focused on preventative conduct and promoting good
customer outcomes.
Georgia Amery, Senior
Manager, Governance,
Regulation and
Conduct, Deloitte

FASEA CPD Categories & RG 146 Knowledge Areas

FASEA CPD Category Hours / points RG 146 Knowledge Hours / points

for this article Areas for this article

Technical competence Generic knowledge

Client care and practice Superannuation 0.5

Regulatory compliance and 0.5 Ethics 0.5

consumer protection

Professionalism and ethics 0.5 General

2 | ASFA Learning | SuperCPD Trustee

Disclaimer: This communication contains general information only, and none of Deloitte Touche
Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively,
the “Deloitte organisation”) is, by means of this communication, rendering professional advice or
services. Before making any decision or taking any action that may affect your finances or your
business, you should consult a qualified professional adviser.

No representations, warranties or undertakings (express or implied) are given as to the accuracy or

completeness of the information in this communication, and none of DTTL, its member firms, related
entities, employees or agents shall be liable or responsible for any loss or damage whatsoever
arising directly or indirectly in connection with any person relying on this communication. DTTL and
each of its member firms, and their related entities, are legally separate and independent entities

The content of this article is correct at the time of writing – 15 November 2021.

Anti-hawking provisions
Where did the provisions come from?
In response to recommendations from the Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry (‘the Royal Commission’), a tranche of reforms was
passed in the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth). Contained
within Schedule 5 of this tranche of reforms were amendments made to the hawking of financial
products (‘the hawking provisions’). These amendments followed commentary that the interpretation of
the existing legislation did not effectively protect consumers from harm, and that there was widespread
misconduct relating to hawking of financial products to consumers for whom the product was not
designed. Ultimately, the amendments sought to:
• give consumers greater power in making decisions to purchase financial products;
• prevent pressure selling of financial products;
• discourage techniques that may detract from consumers making informed decisions; and
• allow appropriate consumer protection.
The provisions came into effect on 5 October 2021.
What do they apply to?
The hawking provisions apply to ‘financial products’1 being issued or sold to ‘retail clients’.2 The
definition of ‘financial products’ includes products such as insurance, superannuation, shares,
interests in managed investment schemes and currency trading, while the definition of ‘retail client’
differs based on the financial product. This operates to ensure that offers, requests or invitations
about financial products made to sophisticated investors or wholesale clients are not prohibited (as
these clients are deemed to be more capable of assessing value).
What are the requirements?
The Underpinning all of the hawking provisions is a single ‘general prohibition’. This prohibition
stipulates that:
“a person must not issue, sell, request or invite the purchase of a financial product if the
consumer is a retail client and this is made in the course of, or because of, an unsolicited contact
with the consumer.”
In order to properly understand how the general prohibition operates, it is necessary to unpack each
of the three key components within this prohibition.

1
See sections 763, 764A and 765A of the Corporations Act 2001 (Cth).
2
See sections 708, 761G(7)(c), 9 ‘Professional Investors’, 761GA ‘Sophisticated Investors’, and 761GA ‘Large Businesses’ of
the Corporations Act 2001 (Cth).

ASFA Learning | SuperCPD Trustee | 3

Offer, request or invite
The hawking provisions only apply where there is some form of offer, request or invitation on the part
of the financial institution. Some of the factors involved in determining whether conduct constitutes an
offer, request or invitation are:
• the context of the interaction;
• the behaviour of the consumer and offeror; and
• the actual words exchanged between the parties.
Providing a consumer with a quote, or requesting / inviting a consumer to complete an application form,
will generally constitute an offer, request or invitation. However, general advertising or the provision of
information will generally not constitute an offer, request or invitation.
As such, trustees are not prohibited from contacting their members to provide them with information.
For example, the hawking provisions allow a trustee to contact members who are approaching
retirement with information about different retirement income products, provided that the trustee does
not make an offer, request or invitation to the member.

Example 1
Sarah recently obtained a caravan policy with ABC Insurance for her Dreamliner 2000. Two weeks
later, on a follow-up call from ABC Insurance, Sarah asked to change her postal address. Sarah
spoke to John at ABC Insurance, who assisted in the change of address. As part of the conversation,
Sarah mentioned that she also owned a boat. Given that ABC Insurance also offer boat insurance,
John provided some general information on that product and its features.
This conduct is unlikely to constitute a breach of the hawking provisions, as John did not make an
offer, request or invite in relation to a financial product (being boat insurance). However, if John had
have provided Sarah with a quote (either over the phone or on email) or asked whether Sarah would
like to purchase boat insurance, ABC Insurance likely would have contravened the hawking
provisions.

4 | ASFA Learning | SuperCPD Trustee

Unsolicited contact
The hawking provisions only apply where the contact made with the consumer is considered unsolicited.
Contact will be considered unsolicited contact where:
a) The contact is wholly or partly a telephone call, a face-to-face meeting, or any real-time
interaction in the nature of a discussion or conversation; and
b) The consumer did not consent to the contact, or the consent was not valid.
We explore each point further below.
What is a ‘real-time’ interaction
For contact to be ‘real-time’, both the offeror and the consumer must respond to each other continuously
in real time, or there must be an expectation that both parties will provide an immediate response to
each other. This includes both verbal and written communication and is technology neutral. This means
that contact such as instant messages through social media, online video chat services, chat bots driven
by artificial intelligence and text messages may be captured, depending on the circumstances.

Example 2
XYZ Bank has a practice of sending letters out to consumers which contain a form that consumers can
complete and return to receive a call-back from XYZ Bank. This specifies the time and date that the
consumer would like the call, and the types of products they are interested in.
The sending of the letter is unlikely to constitute a breach of the hawking provisions, as the letter will
not be considered a real-time interaction.
If the consumer returns the completed form, and XYZ Bank calls the consumer within six weeks of its
return, the call will not be considered unsolicited (despite the consumer not consenting to the original
letter). However, if the consumer does not return the completed form, XYZ Bank would not be
permitted to call the consumer and make an offer, request or invite. Such conduct would be considered
a breach of the hawking provisions, on the basis that the conduct was unsolicited.
.
What is ‘valid consent’ to contact?
For consent to be valid it must be provided prior to the contact, positive and voluntary, clear and
understood by the consumer, and received no more than six weeks before the contact or offer. The
consent must be allowed to be varied or withdrawn.
Within the scope of consent
To be able to make an offer, request or invite, consent must be provided in relation to that financial
product, or be reasonably within the scope of the consumer’s consent.
The consent will be considered reasonably within scope where:
a) the consumer has consented to contact in relation to products of a particular type, or with
particular features, and the product is of that type or has those features;
b) the consumer asks for a product which has a particular purpose or function and the financial
product that is offered has that purpose or function; or
c) a reasonable person would consider the financial product to be within the scope of the
consumer’s consent. That is, where the financial product:
• covers the risks that the consumer consented to being contacted about;
• has the same purpose or function as the product that the consumer consented to being
contacted about; or
• is so closely related to the product that the consumer consented to being contacted about
that the consumer would reasonably expect to be offered that product.
It is possible for more than one financial product to be offered if the consumer consented to being
contacted about multiple products. It is also possible for more than one financial product to be offered
if the consumer’s consent is sufficiently broad to reasonably apply to more than one product (whilst still
being clear).

ASFA Learning | SuperCPD Trustee | 5

Please note, offerors can only bundle or cross-sell products if the consumer’s consent is sufficiently
broad so as to reasonably apply to each of the products offered. Where a product contains multiple
features, the offeror will need to consider all features in determining whether this is within the scope of
the consumer’s consent. The fact that two products could be, or often are, offered together at the point
of sale does not necessarily mean that they are reasonably within the scope of a consumer’s consent.

Example 3
Cathy rings up ABC Insurance and speaks with Julia about obtaining insurance. Cathy mentions that
she specifically wants to be covered if there is a flood in her area. Julia asks Cathy whether she rents
or owns her home. Cathy confirms that she owns her home. Julia proceeds to offer Cathy both
building and contents insurance.
This conduct is unlikely to constitute a breach of the hawking provisions, as Cathy consented to being
contacted in relation to the offer of multiple insurances covering the same financial risk (that is, loss
she may suffer as a result of a flood). As Julia confirmed that Cathy owned her home the offering of
building insurance is likely to be within the scope of the consent and consistent with the hawking
provisions.

Prior consent
Consent will only be valid where it was obtained before the start of contact. There can not be any
reliance placed on consent obtained at the start of, or during, an unsolicited contact (such as an
outbound call).
If a consumer actively initiates contact with an offeror, consent cannot practicably be obtained prior to
contact. Therefore, for any consumer-initiated contact, it is assumed that consent is provided at the
beginning of the contact.

Example 4
Cheryl calls Karen at LMN Investments about purchasing some shares. Karen provides information
regarding the various share options LMN Investments has. Cheryl selects one of the options that
Karen provided information on, and Karen proceeds to make that transaction on Cheryl’s behalf.
This conduct is unlikely to constitute a breach of the hawking provisions as Cheryl will be taken to
have provided consent at the commencement of that contact.
.
Positive and voluntary consent
Consent will only be valid where the consent provided was a positive and voluntary act of the consumer.
Indicators that consent is positive and voluntary include where a consumer:
• Takes an active step to consent to the contact (e.g. initiating the contact).
• Makes a conscious decision to seek the financial product (e.g. not just failure to act).
Indicators that consent is not positive and voluntary include where a consumer:
• Provides consent as a result of a leading question or through inducement.
• Has merely failed to ask for contact to stop or been silent on this.
• Has been manipulated, pressured, forced or coerced into providing consent.
• Was unaware that they were going to be contacted about a financial product/s.

6 | ASFA Learning | SuperCPD Trustee

 Example 5
Simon calls Caroline at XYZ Bank to question a transaction on his account. In the course of this
conversation, Simon tells Caroline that he will be starting a new job next month. Because of this,
Caroline asks whether Simon is interested in income protection. Simon does not respond to the
question, but Caroline continues to provide a quote.
This conduct is likely to constitute a breach of the hawking provisions, as the quote was not provided
in response to positive consent. While Simon did not explicitly decline Caroline’s offer, the consent
was not positive and will therefore not be considered valid.

Clear and understood consent

Consent will only be valid where the consent was clear, and a reasonable person would have
understood that the consumer consented to the contact.
Indicators that consent is clear and understood include where a consumer:
• Uses language that clearly communicates the consent.
• Indicates the product, purpose or function of the product they are consenting to.
• Is sufficiently informed that they had provided consent to be contacted about that financial
product, for which they may receive an offer, request or invite.
Indicators that consent is not clear and understood include where a consumer:
• Is vague or ambiguous on what they are consenting to.
• Is incentivised to hastily consent to be contacted about a financial product.

Example 6
ABC Insurance runs a competition where consumers provide consent to be contacted in relation to
the sale or offer of financial products, in exchange for going into the draw to win a new car. Ben
excitedly fills out the form.
Two weeks later, Steve from ABC Insurance calls Ben and provides him with a quote for car
insurance. Ben asks why he is being offered car insurance and says he has just renewed with his
existing insurer and is not looking to swap. Steve informs Ben that he provided consent to be
contacted about this when he went into the draw to win a car.
This conduct is likely to constitute a breach of the hawking provisions, as ABC Insurance did not
specifically, or separately, draw Ben’s attention to being contacted about financial products when
filling out the form. As such, no reasonable person would likely have understood that Ben had
consented to being contacted in relation to an offer of car insurance.

ASFA Learning | SuperCPD Trustee | 7

Varying or withdrawing consent
Consent must be capable of being varied or withdrawn by the consumer immediately, regardless of the
form in which the variation or withdrawal is provided (as long as the identity of the consumer is
reasonably ascertainable). Once withdrawn or varied, the offeror can no longer rely on the original
consent to contact the consumer.
Consent will expire 6 weeks after it was obtained unless a longer period is required (such as for a
medical examination).
After the expiry of the consent period, the consumer must provide new consent to be contacted (e.g. a
variation does not restart the six-week consent period). This new consent can be provided before or
after the initial consent expires.

Example 7
Alana completes a ‘register your interest’ form with LMN Investments, asking for a call-back regarding
the purchase of bonds. The next day Brendan from LMN Investments calls Alana to provide an offer
for the purchase of bonds, however, Alana informs Brendan that she is no longer interested in
receiving calls but is happy to be contacted via email. A week later, Brendan makes a follow up call
to Alana to see if she has changed her mind.
This conduct is likely to constitute a breach of the hawking provisions as Alana has withdrawn her
consent to be contacted by telephone. Brendan should have recorded this information in LMN
Investments’ systems to prevent future unsolicited contact by him, or any other sales representative.

8 | ASFA Learning | SuperCPD Trustee

Causal nexus
The hawking provisions only apply where there is a link between the unsolicited contact and the offer,
request or invitation. That is, where the offer, request or invitation is ‘because of’ unsolicited contact
(the ‘causal nexus’).
It is possible for the causal nexus to be broken. That is, where:
• the consumer has taken active steps to consent to further contact involving an offer, request
or invite in relation to the financial product; and
• the consumer has had reasonable opportunity after the unsolicited contact to consider any
information that they have been provided about the financial product to assess its suitability.
Please note, the causal nexus will not exist where the link between the offer, request or invitation and
the unsolicited conduct is trivial, insignificant and remote. This includes where advertisements, or the
provision of information, has prompted a consumer to contact an offeror.

Example 8
Andy walks into an XYZ Bank branch to close a savings account that he no longer requires. While he
is in there, Jo informs Andy that XYZ Bank has just launched a new margin lending facility. Jo provides
Andy with a copy of the terms and conditions and proceeds to read a disclaimer to Andy that the offer
she is providing is not a result of unsolicited contact, to which Andy agrees. Jo then issues the margin
lending facility to Andy.
This conduct is likely to constitute a breach of the hawking provisions as the causal nexus between
Jo initiating the contact on the financial product and Jo making the offer in relation to the financial
product has not been broken. There were no active steps on Andy’s part, nor a reasonable opportunity
for Andy to consider the information provided. This is despite Jo providing Andy with a copy of the
terms and conditions and reading out the disclaimer.

ASFA Learning | SuperCPD Trustee | 9

.
What are the exceptions?
The hawking provisions are subject to a number of exceptions.
Basic banking exemption: an offer, request or invite made to a consumer to purchase a financial
product that is a basic banking product (where the offer, request or invite is made during a
consumer-initiated interaction) is not subject to the hawking provisions.
For example, if a consumer called XYZ Bank to change their residential address, XYZ Bank could
offer the consumer a transaction account even where that was not within the course of the
conversation or in any other way consented to.
Personal advice exemption: an offer, request or invite made in the course of giving advice to a
client by an offeror who is required to act in the best interests of a consumer will not be subject to
the hawking provisions.
For example, if a mobile sales representative of LMN Investments did a house call to an existing
client and offered them the purchase of stocks under a personal advice model, this conduct would
not be caught by the hawking provisions.
Existing contract or renewal: an offer, request or invite that extends the term of a contract that is
still in-force would not involve an offer, request or invite about a new financial product and would
not be subject to the hawking provisions. Further, contact existing consumers about a financial
product that has already been purchased, or that is provided under a contract that is still current, is
also permissible.
For example, if ABC Insurance had a number of consumers who had policies that had expired in
the last 30 days, they may contact each of them to understand whether they would like to renew
that policy.
Fulfilling a legal obligation: an offer, request or invite may be made where a trustee is required
to do so in order to fulfil a legal obligation.
For example, if a consumer who held a superannuation product with XYZ Bank passes away, XYZ
will be permitted to provide a range of options to the beneficiary for the payment of the benefit in
order to fulfil their obligations at law.

What are the consequences?

A breach of the hawking provisions is considered a strict liability office (see section 992A(1) and (9)
of the Corporations Act 2001). An offeror will breach the hawking provisions if:
a) the offeror makes an offer of, or request or invitation to apply for a financial product;
b) the offer is made in the course of, or because of, contact with a consumer;
c) the contact is a telephone call, meeting, or any other real-time interaction in the nature of a
conversation or discussion; and
d) the contact is made in the absence of a valid consumer consent.
General consequences
The maximum penalties for breaching the hawking provisions are:
• For an individual, a fine of 60 penalty units (currently $13,320), 6 months imprisonment, or
both.
• For a body corporate, a fine of 600 penalty units (currently $133,200).
Right to return and refund
In addition to the above general consequences, a consumer has the right to return any financial
product issued or sold to them and receive a refund, where the hawking provisions have been
breached. The consumer must return the product within 6 weeks of the financial product being issued
or sold, or 1 month after the cooling off period expires. The amount that will be refunded depends
on the financial product.

10 | ASFA Learning | SuperCPD Trustee

Final thoughts
The changes made to the hawking provisions represent a shift in the regulation of sales practices and
have already had vast impacts on organisation’s business models and operations. It is expected that
over time the regulation will become embedded into the culture and mindset of frontline staff and that
the need for onerous oversight and monitoring will be overshadowed by the drive to deliver fair
consumer outcomes.

ASFA Learning | SuperCPD Trustee | 11

Disclaimer

This article provides general information, does not constitute advice and
should not be relied on as such. Professional advice should be sought
prior to any action being taken in reliance on any of the information.
Liability limited by a scheme approved under Professional Standards
Legislation.

These materials are not intended to give and do not constitute legal, tax,
accounting, financial or any other advice or opinion. While every care is
taken in preparing the material, no representation or warranty is made
in relation to the accuracy, currency, reliability or completeness of any
information included or opinion expressed in these materials.

© Association of Superannuation Funds of Australia Limited (ASFA) 2021. LEARNING