Risky business
Greg Tanzer
The securities watchdog has issued a consumer alert warning Australian investors to avoid offshore financial products that do not comply with local requirements.
The warning was issued following recent advertisements by New Zealand company Asset Finance, which offered Australian investors debenture stocks with returns ranging from 9.75 to 12 per cent per annum.
According to the Australian Securities and Investments Commission (ASIC), the company did not comply with Australian disclosure requirements, as it had not lodged a prospectus with the regulator.
The company was then directed by ASIC to cease promoting products that were not in full compliance with Australian requirements.
ASIC executive director of consumer protection Greg Tanzer said investors needed to exercise extreme care when investing overseas, as they might not be protected by Australian law.
“If you take up an offer of securities from an overseas entity that has not complied with Australian law or deal directly with an overseas broker, you may lose the protections provided by Australian law,” he said.
According to Tanzer, every business that provides financial advice must be licensed by ASIC, and companies that offer securities to Australian consumers must issue a prospectus.
“The prospectus is an essential document that tells you what you need to know to assess the risks of an investment, including information about the company offering the investment and the investment itself. While it’s not a guarantee of performance, you can use the prospectus to make an informed decision about whether or not to invest your money”, Tanzer said.
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