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ASIC slams advice on capital protected products

An ASIC report has raised concerns about the standard of advice provided to investors about capital protected products.

Report 377 Review of advice on retail structured products found that 50 per cent of the files reviewed by ASIC contained “insufficient evidence to show that advisers had met their obligations to investigate clients’ relevant circumstances, the subject matter of the advice and then to provide appropriate recommendations.”

An ASIC report in May 2013 also found issues with the way complex capital products are marketed to consumers.

As part of Report 377 five pieces of advice from 10 firms were reviewed.

“The findings were disappointing and with FOFA now raising the bar for advisers, our warning against inappropriate selling of complex products cannot be clearer,” said ASIC commissioner Peter Kell.

“Capital protected products are complex and can be difficult for investors to understand. Advice about them needs to be appropriate and accurate. Where it isn’t, we will take action,” he said.

“Where our review identified concerns with the advice provided, we are analysing the cause of the problem and considering appropriate regulatory outcomes. In some cases, we are conducting further surveillance with a view to enforcement action where merited,” said Mr Kell.


“We will also ensure that where we have significant concerns with the advice provided to individual clients, those clients have their position appropriately reviewed,” he said.