The marketers of fixed-term investment products have found themselves in the sights of the Australian Securities and Investments Commission (ASIC) with the regulator warning consumers that such offerings are not necessarily comparable with bank term deposits.
ASIC said it was monitoring advertising around the products and flagged the likelihood of action against the promoters.
It pointed to what it described as “a surge” in the marketing of fixed-term investment products in recent months.
“ASIC is monitoring such advertising and the entities involved because of reports about fixed-income products being advertised as term deposit ‘alternatives’ or ‘substitutes’, and consumers investing significant sums as a result,” the regulator said.
“ASIC views these investment products as riskier than term deposits because they may be issued by entities that are not well-capitalised, not protected by the Government’s Financial Claims Scheme, and not supervised by the Australian Prudential Regulation Authority (APRA). Some are also backed by concentrated portfolios of higher risk unlisted and illiquid assets,” it said.
“ASIC recognises that many consumers may be seeking higher and regular returns on their investments during this time because of low interest rates and market volatility. But there are significant differences between bank term deposits that are relatively low-risk products and fixed-term funds and debentures offering...