ASIC to keep monitoring complex product advice
The corporate regulator will keep monitoring advice provided on complex investment products as it reviews its approach to regulating this area.
The Australian Securities and Investments Commission (ASIC) has published Report 384 regulating complex products, outlining the risks posed by such products to retail investors and identifying opportunities for further work where appropriate.
The regulator regarded financial advice as increasingly critical where investors may have difficulty in assessing the risks associated with the product.
“Our recent review of advice files where structured products were recommended to investors identified cases where advisers did not communicate the key features and risks accurately to clients,” the report said.
“In some cases, advisers may have misrepresented the product as being less complex than it was.”
ASIC said it would continue to review the quality of financial advice provided to clients in this area, saying it would take a risk-based approach.
Many clients still invest in complex products without seeking financial advice, according to ASIC.
“We will explore the potential for using investor self-assessment tools to assist investors in testing their understanding of particular products before investing,” the report said.
The review comes as the low-yield environment and non-trending equity market over recent years has contributed to the development of new products that have the potential to introduce new types of complexity, according to ASIC Commissioner Greg Tanzer.
“Complex products, due to their nature, can be difficult for investors to understand. This can lead to them being mis-sold, particularly when investors are searching for yield,” Tanzer said.
“We want those institutions selling these complex financial products to consider the risks outlined in this report in the context of their own business. It’s not a sustainable business model if your customers are losing money.”
Recommended for you
The Australian Financial Complaints Authority has reported an 18 per cent increase in investment and advice complaints received in the financial year 2025, rebounding from the previous year’s 26 per cent dip.
As reports flow in of investors lining up to buy gold at Sydney’s ABC Bullion store this week, two financial advisers have cautioned against succumbing to the hype as gold prices hit shaky ground.
After three weeks of struggling gains, this week has marked a return to strong growth for adviser numbers, in addition to three new licensees commencing.
ASIC has banned a Melbourne-based financial adviser who gave inappropriate advice to his clients including false and misleading Statements of Advice.
