Hybrids must better convey risk: ASIC
Tuesday, 20 August 2013 12:30pm

The Australian Securities and Investments Commission (ASIC) is cracking down on the misleading marketing of hybrid securities.

ASIC has criticised what it terms "misleading labelling" and "unwarranted comparison" of hybrids to less risky products such as covered bonds.

The regulator also expressed concern about the overselling of potential returns of hybrids, and said better investor education was critical.

Quoting Investment Trends figures, ASIC said that more than $18 billion of hybrids have been issued by banks and corporates since November 2011. There were approximately 75,000 investors in hybrid securities last year, two thirds of whom were self-managed superannuation funds.

ASIC Commissioner John Price said: "We have responded to the increased issuance and popularity of hybrids by working with issuers and their advisers, as gatekeepers, to help improve prospectus disclosure and ensure selling messages are not misleading.

"But there is more work to be done and we will investigate any reports of misconduct (e.g., misleading promotion or inappropriate comparisons with other products), crackdown on misleading ads, and consider what names or labels hybrid products are given to ensure they do not confuse investors," he said.

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