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.
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