Industry should take lead on complex products: ASIC

The Australian Securities and Investments Commission (ASIC) wants the financial services sector to take the lead in developing standards for the issuance of complex products.

While ASIC has called for the industry to lead the way in implementing guidelines for the sale of complex products, the regulator's report on the risks posed by complex products to retail investors, published on Friday, raised concerns that poor quality advice and "inappropriate distribution channels" could lead to products being mis-sold.

ASIC Commissioner, Greg Tanzer, said the regulator would continue to monitor issures' compliance with disclosure and advertising when selling complex products, while encouraging industry-led initiatives in the development of product development and distribution standards.

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"Complex products, due to their nature, can be difficult for investors to understand," he said.

"This can lead to them being mis-sold. This risk can be amplified where investors perceive a product to be simple when in fact it has a complex structure or complex features that may have an impact on its performance."

Of the nine stakeholder submissions received by ASIC, three said the distribution of complex products should only be allowed if financial advice has been provided, and another suggested that they should be restricted to ‘sophisticated investors'.

However, a fifth submission suggested that the regulatory system should provide adequate means to protect investors from the risks associated with complex products.

 

 

 




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