ASIC mulls compulsory advice on complex products
The corporate regulator has received feedback urging it to restrict usage of complex financial products to investors who have received financial advice.
The feedback was in response to Report 384 Regulating Complex Products, released by ASIC in January, and was published in a report released on Friday.
Some of the submissions received by ASIC, which came from individuals, financial advisory businesses, academics and a stock exchange, argued the distribution of complex products should only be allowed if financial advice is provided.
The report said these submissions were based on the premise that the “risks to investors are greater in non-advised channels where investors are more likely to make decisions without having access to or taking into account all the relevant information”.
One submission disputed this notion, however, stating that investing through an adviser is not necessarily intrinsically safer for investors.
It argued “both approaches can lead to good and bad outcomes” and that the “regulatory system should provide adequate means to protect investors from the risks associated with complex products regardless of whether or not the investor has received financial advice”.
Another submission argued the sale of some types of complex product should be restricted solely to sophisticated investors.
ASIC said while it does not plan to issue guidance on its expectations of product issuers when selecting distribution channels, it will take it into account as part of the regulator's risk-based approach to surveillance.
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