Product manufacturers should educate investors – ASIC
The Australian Securities and Investments Commission (ASIC) has acknowledged the need to identify and address market problems earlier to minimise the risk of failures, but has insisted that its job is not to prevent all investor losses.
This has been made clear by ASIC deputy chairman Peter Kell in a speech to a Sydney conference in which he said "market regulators cannot and should not prevent all investor losses. We are not prudential regulators".
However, he went on to acknowledge that there was a clear need "to identify and address market problems earlier, to minimise the risk of market failures leading to widespread losses and systemic weaknesses".
Kell said this was the theme for securities regulation going forward and could be seen in Future of Financial Advice changes.
"Rather than relying purely on disclosure, certain types of conflicted remuneration, notably commissions, have been prohibited going forward. A clearer legal requirement to prioritise the interests of retail investors has also been introduced — the ‘best interests' duty," he said. "We will certainly be interested to see how this is applied when advising on complex products."
However he said that from a self-regulatory perspective, product manufacturers should educate investors about a product.
"This could overcome some of the inherent weaknesses of traditional disclosure," Kell said. "We need to reduce the risk of complex products being mis-sold to investors. This is a perennial challenge."
Recommended for you
The central bank has released its decision on the official cash rate following its November monetary policy meeting.
Melbourne advice firm Hewison Private Wealth has marked four decades of service after making its start in 1985 as a “truly independent advice business” in a largely product-led market.
HLB Mann Judd Perth has announced its acquisition of a WA business advisory firm, growing its presence in the region, along with 10 appointments across the firm’s national network.
Unregistered managed investment scheme operator Chris Marco has been sentenced after being found guilty of 43 fraud charges, receiving the highest sentence imposed by an Australian court regarding an ASIC criminal investigation.
