ASIC today published feedback it has received on the risks posed to investors by complex products and options for mitigating these risks.

In January 2014 ASIC outlined the risks posed by complex products to retail investors at each stage of the life cycle, set out its recent and current work in this area, and opportunities for further work (refer: 14-017MR).

Feedback on the risks posed by complex products, and the options for mitigating these risks, including the opportunities for further work flagged by ASIC, is outlined in Report 400 Responses to feedback on REP 384 Regulating complex products (REP 400).

ASIC Commissioner Greg Tanzer said, ‘Complex products, due to their nature, can be difficult for investors to understand. This can lead to them being mis-sold. This risk can be amplified where investors perceive a product to be simple when in fact it has a complex structure or complex features that may have an impact on its performance.

‘ASIC will continue to monitor issuers’ compliance with disclosure and advertising when selling complex products, and encourage industry-led initiatives in the development of product development and distribution standards.’

ASIC will also monitor the outcome of the Financial System Inquiry, which may make recommendations relevant to the regulation of complex products.

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REP 400