CHOICE welcomes the proposed ASIC ban on risky investment products

A desk with a laptop and a business newspaper

Consumer advocate CHOICE welcomes ASIC’s announcement today that the
regulator proposes to use its new Product Intervention Powers to ban harmful
investment products. 

“Binary options and contracts for difference are glorified gambling
dressed up by financial licensees as a safe investment. With over four in five
investors losing money from binary options investments, it’s clear that these
products are extremely dangerous to people,” says CHOICE CEO Alan
Kirkland. 

“These products have terribly poor and complex product design. At their
core they are extortionary and extremely harmful investments for people. It is
very concerning that financial licenses are targeting vulnerable people to
invest in these risky and complex products with financial inducements or
sweeteners like free iPads.”

“The industry pays over $280M per annum in commissions to people like
taxi drivers to push these products onto unsuspecting consumers. The fact that
one third of customers earn less than $37,000 per annum demonstrates that these
products are being systematically mis-sold to disadvantaged people.”

“We welcome ASIC taking a proactive approach in using its new product
intervention powers to protect consumers. It’s extremely unclear what
value these products bring to the financial wellbeing of people or the
economy more broadly.”

“Today’s announcement by ASIC is consistent with a number of other
jurisdictions in stamping out these harmful products. For example, the
Financial Conduct Authority in the United Kingdom recently used its product
intervention powers to ban retail binary options.”

CHOICE encourages ASIC to continue to be proactive in using these product intervention powers in stamping our predatory behaviour in our financial system. 

Media contact: media@choice.com.au