AUSTRALIAN Securities & Investments Commission chairman Greg Medcraft has urged investors and investment houses to exercise more care in dealing with complex financial products, highlighting the growth of self-managed super funds as the greatest challenge facing the regulator in the next decade.
Mr Medcraft said he was annoyed with the makers of financial products who did not properly consider the risks of the products and the market they were selling to. He said they needed to "wise up and do the right thing" or risk facing action by legislators and the courts.
The growth of self-managed super funds -- now worth more than $400 billion, or one-third of the total super industry in Australia -- is placing increased demands on the regulators because the thousands of self-managed super funds are not regulated by the Australian Prudential Regulation Authority and invest largely in debt and equity products regulated by ASIC.
Mr Medcraft said complex financial products were difficult for investors to understand, leading to risks that they could be mis-sold to investors, particularly those searching for higher-yielding investments. "Manufacturers -- and, frankly, this is what annoys me -- should make sure that the products that they sell, how they are marketed, who they are marketed to, are appropriate, and the consumers understand the products that they are buying."
