Call to ban ‘past performance’ advertising
Reference to ‘past performance’ in financial services product advertisements should be banned, according to Arun Abey, executive chairman of financial planning dealer group Ipac Securities.
Abey made the call during a presentation at the Australian Securities and Investment Commission’s (ASIC’s) annual Summer School 2008 last month.
“In the 25 years I’ve been in the industry I’ve never seen past performance ads, including ones which have been used by our parent company, that were at all useful to investors making better decisions,” he said.
“Almost always, these (past performance statistics) have resulted in poor decisions — I’ve never seen the exception — so let our industry actually compete on a more intelligent basis than simply past performance.”
Earlier, Abey said “billions of dollars are being mis-invested in share markets chasing past performance, even when markets are relatively efficient and fair”.
In response, ASIC deputy chairman Jeremy Cooper said past performance is “such a big problem, and we sadly do see an awful lot of that still happening and we’re investigating how we can help investors not fall into that trap”.
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