ASIC's shadow shop 'supports need for reform', says Peter Kell
Australian Securities and Investments Commission (ASIC) commissioner Peter Kell has defended the regulator's decision to reveal the "headline results" of its recent financial planning shadow shop to the Parliamentary Joint Commission (PJC).
ASIC had promised the PJC that it would provide it with the headline results of the shadow shop ahead of the full details, Kell said.
"We wanted to do that in as timely a manner as possible so that [the PJC] understood that this project supported the need for reform, but we will be releasing further results and the detail in a few weeks' time," he said.
ASIC revealed to the PJC in late January that only two of the 64 financial plans scrutinised were rated 'good' according to the regulator's criteria. The details of the criteria will be released in "early March", according to Kell.
Speaking at an Association of Superannuation Funds of Australia luncheon yesterday, Kell also announced the release of new regulatory guidelines on the advertising of financial products and services (Regulatory Guide 234).
"The experience in recent years indicates that ads that do not give clear, accurate and balanced information about a financial product or service can create unrealistic expectations that can lead to poor financial decisions," Kell said.
He added that ASIC would be taking a "strong response to misleading ads", and that the regulator's new powers allowed it to issue infringement notices and formal public warning notices.
"We also have the power under the ASIC Act to seek civil pecuniary penalties through the courts of more the $1 million per breach," he added.
The regulator will be closely examining the way risk is explained (or rather, not explained) to consumers, Kell said - with a focus on language about 'guaranteed' or 'protected' returns. He gave the example of one provider that advertised a geared investment as being 'stress-free'.
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