ASIC financial adviser exam, Conduct rules, breach reporting, DDO and AFCA question: hawking rules in the Corporations Act

ASIC examConduct rules, breach reporting, DDO and AFCA

Borealis Life's sales team cold-calls Ken, 45, a retail client who never asked to be contacted, and during the call sells him a life insurance policy that Borealis issues. No advice is given. Under the hawking rules in the Corporations Act … (i) Ken may have a right to return the policy and obtain a refund. (ii) the same call would not breach the hawking prohibition if Ken were a wholesale client.

A (i) True, (ii) True
B (i) True, (ii) False
C (i) False, (ii) True
D (i) False, (ii) False

Show the answer and explanation

Answer: A. (i) True, (ii) True

Both statements are true. Section 992A(1) of the Corporations Act 2001 (compilation 19 Sep 2026) bans offering a financial product to a retail client in the course of, or because of, an unsolicited contact such as a cold call (s992A(4)). Because Borealis, the issuer, contravened it, Ken has a right of return and refund under s992AA, exercisable within the period that section sets. The prohibition applies only where the consumer is a retail client (s992A(1)(a)), so the same call to a wholesale client would not breach it.

Common mistake

Candidates expect one statement to be a trick; here both describe the provisions correctly.

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