There has been a raft of products now called out by the regulator for promising something they don’t deliver. Particularly in the fixed income-style returns space where investors are desperate for yield while interest rates remain terminally low. This session provides insight into the work the regulator is doing in this area as well as determining the line between marketing and misrepresentation.

Dominic McCormick, consultant, DPM Financial Services
Rhys Bollen, senior executive leader, investment managers, ASIC
Pamela Hanrahan, professor of commercial law and regulation, UNSW Business School
MODERATOR : Matthew Smith, director of retail content, Conexus Financial

Key takeaways

  • A representative from ASIC revealed the corporate regulator would prefer to move quicker on identifying and mitigating fraudulent financial products, but is held back by the steps inherent in its processes.
  • Bollen outlined three recent campaigns ASCI is undertaking to catch products that are fraudulent or not true-to-label; bank alternatives advertised as substitutes, unbalanced comparisons and ‘true-to-label’ surveillance.
  • Bollen also revealed some of the red flags ASIC was looking for when identifying fraudulent products. The kind of full-page advertising Mayfair group sponsored in the Australian Financial Review for a concerted period of time tends to stand out, he explained.
  • Outsized commissions and fishy referral arrangements are also on the radar, he explained, as are comparisons to bank accounts, “because that’s a very unique type of product and anything that’s not a bank account ought not be sold as equivalent to a bank account”.
  • ASIC has more to offer than simply functioning as the “the ambulance at the bottom of the cliff”, UNSW’s Pamela Hanrahan said. “I think one of the difficulties we’ve had over the last ten years is actually that the regulatory agencies haven’t been listened to enough.”
  • As an investment research consultant, DominickMcCormick said it was incumbent on research houses to look into the bad products as often as the good ones, which would provide “broad benefits” to consumers and the investment community.

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