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Hawking and Retail Client Cooling off Period

Hawking

There is a prohibition on hawking conduct that applies to both retail and wholesale clients. Refer to the Corporations Act Regulation 7.8.22 for information on ‘Hours for hawking certain financial products.’ The compliance rules deal with two separate types of sales conduct:

1. Unsolicited face-to-face meetings

There is a direct prohibition on offering to issue or sell a product as the result of an unsolicited face-to-face meeting. The law does not explicitly define the term unsolicited but it is commonly taken to mean where the meeting has not been arranged at the request of the prospective client.

2. Other unsolicited personal contacts

There are restrictions on the conduct of direct marketing via telephone calls, written correspondence or the internet to retail or wholesale consumers. There is no direct prohibition on these activities but the representatives must follow these procedures before offering a product via these means.

  • Representatives must maintain a ‘No Call/No Contact’ register at no cost to the consumer. New contacts must be given the opportunity to:
    • Put their name on its register
    • Specify the time and frequency of further contact and can only be contacted during the hours noted on the register.
  • The Product Disclosure Statement
  • The customer must be given a PDS before becoming bound to acquire a financial product sold via these marketing methods
  • The representative must inform the consumer of the importance of using the information in the PDS prior to making their decision.
  • The consumer is given the option of having the information in the PDS read out to them.

Retail Client Cooling Off Period

A 14-day cooling off period applies to:

  • General and life risk insurance
  • Investment life insurance
  • Managed investments
  • Superannuation & retirement savings accounts

This enables a retail client to return the product to either the person who issued it (insurer or fund manager) or, in some circumstances, sold it to them (broker or authorised representative).

In the case of insurance policies, the cooling off period does not apply to:

  • Interim contracts of insurance;
  • Any general insurance product that is of less than 12 months duration;
  • Any renewal of an existing product on the current terms and conditions Note: cooling-off does apply to renewals where variations to the policy are made;
  • Situations where the client has already made a claim or exercised some other right under the policy; or
  • Where the policy has ended.

The right to return the product can only be exercised during the period of 14 days starting on either of:

  • Time when the confirmation of the transaction has been made; or the
  • End of the fifth day after the day on which the product was issued or sold to the client

Details of the cooling off period must be included in the relevant disclosure documents used at the point of sale by the product issuer or broker.