Regulators cite planners on structured products
Financial advisers have been listed as the dominant distributors of retail structured products in Australia by research undertaken by the International Organisation of Securities Commissions (IOSCO).
The analysis is contained in an IOSCO consultation report which also notes that the Australian financial advisers who are deemed to be the dominant distributors of the structured products may or may not be aligned to the fund managers and banking groups who actually manufacture the products.
As well, the IOSCO report described the Australian investors in structured capital protected as being “more likely to be older, have a higher income and be influenced from a financial advisor relative to investors of other financial products”.
The IOSCO is chaired by the chairman of the Australian Securities and Investments Commission (ASIC), Greg Medcraft.
Commenting on the findings of the IOSCO consultation paper, Medcraft said complex products, due to their nature, could be difficult for investors to understand.
“This can lead to them being mis-sold, particularly when investors are searching for yield,” he said.
One of the key findings of the IOSCO research was the lack of a legal definition of what actually represented a “retail invetor”.
“In the vast majority of respondent jurisdictions, there is no positive (legal) definition of 'retail investor’,” it said. “Most jurisdictions have no definition at all, or define retail investors by opposition to, or exclusion of, professional investors.
Further it found that only three jurisdictions - Hong Kong, Lithuania and Mexico - had a legal definition of structured product.
“In some other jurisdictions, the definition is either not a legal definition (Australia or Belgium), or only a few specific instruments are defined,” the IOSCO report said.
AUTHOR
Mike Taylor
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