ASIC chairman Greg Medcraft has warned brokers to be transparent when selling complex products – or pay the price.
ASIC chairman Greg Medcraft has warned brokers to be transparent when selling complex products – or pay the price.
In his speech at the ASA ‘Making A Difference’ conference Medcraft cautioned investors and borrowers of ongoing risks as new, complex products are continually introduced to the market, many of which are difficult for the general public to understand.
“My position on this is clear: those selling complex products to unsuspecting investors need to wise up and do the right thing.”
Medcraft warned that financial planners and brokers who didn’t adequately explain the risks involved with complex products would fall on the wrong side of the government, courts and ASIC itself.
“ASIC has a working group on complex products which is currently exploring the best ways to regulate these products. This includes considering the whole of the product life cycle, not just distribution and disclosure.”
Medcraft suggested technology such as learning modules could be used to explain the risks and features of a product to clients, who could later be assessed online about their understanding.
He also stressed that investors and borrows needed to take responsibility for their own decisions.
“Investor education remains key. In fact, I like to say if you don‘t understand it, you shouldn’t buy it.”
