ASIC canvasses more power on retail hybrids
The Australian Securities and Investments Commission (ASIC) has admitted it has not raised concerns with either the Government or the Treasury about retail sales of hybrid securities but would nonetheless like more powers to deal with the products.
Answering questions on notice from the Senate Standing Committee on Economics prompted by significant concerns about retail sales of hybrids expressed by former ASIC chairman, Greg Medcraft, the regulator confirmed it had neither raised specific concerns about the products nor recommended a ban on their sale to retail investors or self-managed superannuation funds (SMSFs).
“However, ASIC has considered whether its current tools are sufficient to address the risks posed to retail investors by complex products (which include hybrid securities), and what other approaches could be adopted to improve investor outcomes,” the ASIC response said.
The regulator said it had examined its approach to complex products through a dedicated Complex Products Working Group which had published a report in early 2014 and had also examined its regulatory toolkit and considered whether it was sufficient to address the risks posed to retail investors by complex products.
“ASIC has identified further powers that would help it ensure investors are confident and informed, and advocated for these in its submissions to the Financial System Inquiry, and the Government's response to the FSI seeking feedback on the introduction of Design and Distribution Obligations and a Product Intervention Power,” the ASIC answer said.
“If the proposed Product Intervention Power becomes law, it would enable ASIC to take direct action to deal with significant shortcomings in products or conduct that result in consumer detriment, although no decision has been made by ASIC that such a power would be used to restrict the sale of hybrid securities to retail investors or SMSFs,” it said.
Recommended for you
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
