Complexity of products a challenge: ASIC
The development and subsequent regulation of complex financial products is one of five challenges facing the Australian Securities and Investments Commission (ASIC), its chairman believes.
Speaking at an Australian Chamber of Commerce and Industry lunch on Friday, ASIC chairman, Greg Medcraft, backed powers enabling the regulator to intervene.
Medcraft said ASIC was focusing on:
- Surveillance of complex products;
- Drawing on behavioural economics;
- Improving financial literacy; and
- Guiding Government on law reform arising from the Financial System Inquiry.
"In this regard, I see the product design and distribution obligation and the product intervention power as steps in the right direction," he said.
"Complex products can be appropriate if targeted to the right people."
The ASIC chairman added that the regulator faced challenges regarding structural change within the industry, noting that the advice sector was a key area of focus.
"Our key risk in this area is financial advice, where trust and confidence have been eroded enormously," he said.
"Therefore we are focusing on:
- Surveillance in the funds management sector — and taking action where needed;
- Enabling people to check adviser credentials through our Financial Adviser Register;
- Responding to poor financial advice that affects retirement savings; and
- Improving remediation when consumers suffer loss."
Medcraft also identified digital disruption, globalisation and assiting investor trust and confidence, as challenges facing ASIC.
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