A Guide to ASIC’s Anti-Hawking Regulations & RG 38 Reforms

Introduction

The anti-hawking regime under the Corporations Act 2001 (Cth) underwent significant reforms on 5 October 2021, fundamentally changing how a financial product can be offered to a retail client. Stemming from the Hayne Royal Commission, these changes were designed to address consumer harms arising from unsolicited contact, such as cold-calls and other high-pressure sales tactics.

For Australian Financial Services (AFS) licensees, navigating this updated hawking prohibition is a critical compliance challenge. This guide provides essential information based on the Australian Securities and Investments Commission’s (ASIC) Regulatory Guide 38 (RG 38), focusing on the expanded definition of unsolicited real-time contact and the strict requirements for obtaining valid consumer consent before an offer can be made.

Scope & Rules of the Reformed Hawking Prohibition

Expanded Scope & Application of the Prohibition

The anti-hawking regime, which commenced on 5 October 2021, was significantly broadened following recommendations from the Hayne Royal Commission. These reforms, implemented through the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth), were designed to address consumer harms arising from unwanted products offered through unsolicited contact.

Previously, the Corporations Act 2001 (Cth) contained separate prohibitions for hawking different financial products, such as securities and interests in managed investment schemes. The new anti-hawking regime now applies a single, unified prohibition to all financial products offered to a retail client. This expansion ensures that products like superannuation and insurance, which were areas of significant consumer harm, are covered.

Furthermore, the scope of prohibited conduct was extended beyond just making an offer to sell or issue a financial product. The new laws also forbid a person from making a request or invitation to a retail client that would prompt them to:

• Ask for a financial product
• Apply for a financial product
• Purchase a financial product during or because of unsolicited contact

This change closes a loophole where high-pressure tactics could be used to prompt a consumer to initiate the final transaction.

Defining ‘Real-Time Interaction’

A key feature of the updated anti-hawking prohibition is its application to all forms of “real-time interaction.” This technology-neutral definition ensures the rules remain relevant as communication methods evolve. ASIC’s RG 38 clarifies that a real-time interaction is one where there is an expectation of an immediate response from both parties.

The Corporations Act 2001 (Cth) specifies that unsolicited contact includes:

Interaction Type	Description
Telephone calls	This covers traditional cold-calling and any other sales calls made over the phone.
Face-to-face meetings	In-person discussions, whether scheduled or impromptu, fall under this category.
Any other real-time interaction	This broad category captures modern communication channels where a discussion or conversation occurs. It includes instant messaging, live web chats, video conferencing, and interactions with AI-powered chatbots.

This definition is crucial for marketing and sales teams, as it means compliance obligations extend to digital platforms where immediate conversations are possible. The nature of the communication, rather than the specific technology used, determines whether the hawking prohibition applies.

Defining Unsolicited Contact

ASIC’s Definition of Unsolicited Contact

Under the Corporations Act 2001 (Cth), unsolicited contact is any interaction with a retail client regarding a financial product that they have not consented to. The anti-hawking prohibition is triggered if an offer, request, or invitation is made during or because of this contact. This ensures that consumers are not approached with unwanted products through cold calls or other unexpected interactions.

The definition specifically targets real-time communications, which include:

• Telephone calls
• Face-to-face meetings
• Any other real-time interaction that takes the form of a discussion or conversation

This prohibition extends beyond just offering to sell a financial product. It also includes any request or invitation that encourages a consumer to apply for or purchase a financial product, making the scope of the anti-hawking regime significantly broader.

Key Differences Between Real-Time & Non-Real-Time Communications

A crucial distinction in the anti-hawking regime is between real-time and non-real-time communications. According to ASIC’s guidance in RG 38, a real-time interaction is any communication where there is an expectation that both parties will respond to each other immediately.

The hawking prohibition is technology-neutral and applies to modern channels like:

• Instant messaging
• Live website chats
• Interactions involving artificial intelligence such as chatbots

In contrast, non-real-time communications do not create an expectation of an immediate response and are generally not subject to the hawking prohibition. These methods can be used to encourage consumers to request future contact. Examples include:

• Bulk email distributions
• Physical mail-outs
• Standard advertising, such as brochures or television commercials

However, if a consumer responds to non-real-time marketing and requests contact, any subsequent real-time interaction must still comply with the consent requirements of the anti-hawking rules.

The Critical Element of Consent

Securing Positive & Voluntary Consent

Under the anti-hawking regime, consent from a retail client must be both positive and voluntary. This means the consumer must take an active and deliberate step to agree to be contacted. A failure to opt-out or silence during a conversation does not qualify as positive consent.

To meet the standard required by the Corporations Act 2001 (Cth), consent cannot be obtained through methods that pressure or coerce the consumer.

Examples of invalid consent include:

• Using pre-ticked boxes on a web form
• Burying consent within lengthy terms and conditions for a competition or service
• Eliciting consent during a client-initiated service call by asking unprompted if you can call them back about an unrelated financial product

Essentially, the act of giving consent must be a genuine decision made by the consumer, free from any undue influence or pressure, which aligns with the broader honestly and fairly obligation for AFS licensees.

Requirements for Clear, Specific & Understood Consent

For consent to be valid, it must also be clear and specific, ensuring a reasonable person would understand what the consumer has agreed to. Vague or ambiguous language can invalidate the consent, making any subsequent real-time contact a breach of the hawking prohibition.

The consumer must understand the purpose of the contact and the types of financial products that will be discussed. For instance, a generic agreement to receive “marketing updates” is not sufficient to permit a sales call about a specific superannuation product.

Additionally, the scope of the consent must cover the financial product being offered or be so closely related that a consumer would reasonably expect to be offered it. Furthermore, if a consumer specifies a preferred method of contact, such as email, you must adhere to that request.

The Six-Week Rule for Consent Validity

A critical component of the anti-hawking regime is the strict time limit placed on consent. Once a consumer provides their consent to be contacted, it is only valid for six weeks from the date it was given. If you do not make contact within this period, the consent expires, and any subsequent real-time interaction would be considered unsolicited.

This six-week rule requires AFS licensees to have robust systems for tracking when consent was obtained to avoid inadvertent breaches.

There are important considerations regarding this timeframe:

• A limited exception exists if a financial product requires a medical examination, where the consumer can agree to extend the consent period for up to 12 weeks
• A consumer can withdraw their consent at any time, which immediately renders it invalid

Practical Scenarios & Compliance Traps

Navigating Digital Marketing & Lead Generation Traps

A common digital marketing strategy involves offering “lead magnets,” such as e-books or whitepapers, in exchange for a consumer’s contact details. However, this practice creates a significant compliance trap under the anti-hawking regime.

When a retail client downloads a generic guide, their action does not constitute clear and specific consent to receive a real-time sales call about a financial product. To remain compliant, you cannot treat the act of downloading an asset as implied consent for a follow-up sales call.

Instead, the web form used to capture the lead must include a separate, unticked checkbox that allows the consumer to provide positive and voluntary consent. For example, the form should feature a clear statement such as, “I consent to you calling me to discuss your superannuation products,” which the consumer must actively select.

Without this specific opt-in, any subsequent sales call would be considered unsolicited contact and a breach of the Corporations Act 2001 (Cth).

Managing Cross-Selling Risks During Client Service Calls

Cross-selling financial products during a client-initiated service call is another high-risk area. If a retail client contacts you for a specific purpose, such as inquiring about a bank account transaction, their consent is limited to that topic.

Pivoting the conversation to offer an unrelated financial product, like income protection insurance, constitutes a breach of the hawking prohibition because the offer falls outside the scope of the consumer’s consent, which can trigger breach reporting obligations.

An offer for an additional product is only permissible if it is “reasonably within the scope” of the client’s initial inquiry. Key factors in determining this include:

• The degree to which the additional product manages a financial risk arising from the initial product
• How prevalent it is for consumers acquiring the initial product to also acquire the additional one

For instance, if a client is applying for a home loan, offering home building insurance is likely compliant because it is closely related and often a condition of the loan.

Additionally, attempting to elicit consent for a future call about an unrelated product during the service call is also prohibited. You cannot ask, “While I have you on the line, can I call you next week about our superannuation products?” as this is considered eliciting consent, which is not voluntary.

A Pre-Campaign Compliance Checklist

Key Vetting Questions for Campaigns

To ensure every marketing or sales campaign involving real-time contact with a retail client is compliant, managers should use a mandatory vetting checklist. This process effectively translates the complex legal requirements of the anti-hawking regime into a practical assessment.

Answering these questions before launching a campaign is essential to avoid a breach of the Corporations Act 2001 (Cth). Before initiating contact, your team must be able to answer “yes” to the relevant questions below:

Checklist Item	Compliance Question
Initiation	Did the retail client initiate the real-time contact about this specific financial product?
Consent	If your business initiated the contact, do you have clear, positive, and voluntary consent from the consumer to be contacted about this product?
Timing	Was the consent obtained within the last six weeks?
Scope	Is the financial product you intend to offer reasonably within the scope of what the consumer consented to discuss?
Method	Is the method of contact, such as a telephone call, consistent with the form of communication the consumer agreed to?
Withdrawal	Has the consumer withdrawn their consent at any point before or during the contact?

Essential Record-Keeping for Compliance

Meticulously documenting your compliance efforts is the only way for an AFS licensee to prove that an outbound real-time contact was preceded by valid consent. These records are critical for demonstrating compliance with the hawking prohibition in the event of AFSL audits and investigations by ASIC.

Licensees must maintain comprehensive records for every instance of consumer consent, including:

Record-Keeping Requirement	Details / Examples
Date and Time	The exact date and time the consent was obtained.
Method of Capture	The specific method used, such as a web form submission with an IP address, a timestamped call recording, or a signed document.
Consent Wording	The precise wording of the consent statement to prove it was clear and specific.
Scope of Consent	Details of the financial product or class of products the consumer agreed to discuss.
Permitted Contact Methods	The specific methods of contact to the consumer permitted (e.g., telephone calls only).
Variation or Withdrawal	Any records of the consumer varying or withdrawing their consent.

Conclusion

The anti-hawking regime, reformed on 5 October 2021, fundamentally reshaped how a financial product is offered by expanding the prohibition to all real-time interactions with a retail client. Navigating these rules under the Corporations Act 2001 (Cth) requires a consent-driven approach, where obtaining positive, clear, and time-limited consumer consent is the key to compliant engagement.

To ensure your marketing and sales practices meet these strict requirements, contact our AFSL compliance lawyers at AFSL House for tailored compliance frameworks and strategic guidance. Our specialised AFSL lawyers can help you turn these regulatory challenges into an opportunity to build client trust and secure your operations.

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