ASFA calls for standardised labelling of financial products
The Association of Superannuation Funds of Australia (ASFA) has called for standardised labelling of financial products to provide retail investors with a better understanding of the risks of investing.
ASFA chief executive Pauline Vamos said clarity around the risk of losing money was needed to prevent large numbers of retail consumers, particularly in superannuation and retirement, from “dissolving their super funds through poor investment”.
“Ultimately, what we need is a move towards standard risk labelling for products,” she said. “This is a complex area, but one that is worthwhile pursuing.”
Vamos noted that a high-risk product currently under scrutiny by the Australian Securities and Investments Commission (ASIC) was contracts for difference (CFDs).
“CFDs are highly complicated products which require more detailed and visible labelling to alert potential investors to the risk of losing their money,” said Vamos, adding that ASIC’s initiative to improve the labelling and product disclosures on CFDs was a great start.
Referring to ASIC’s published warning about CFDs on its Super Guru website, Vamos said it was particularly appropriate for self-managed super fund (SMSF) trustees as research revealed they were confused about the risks involved in investing in CFDs.
Vamos added that while the Federal Government was looking at the definitions of retail, sophisticated and wholesale investors, SMSF trustees still needed consumer protection despite having large balances and being inclined towards more sophisticated products.
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.
