Self-directed investors worry global regulators

Mis-selling, mis-labelling and misleading disclosure are all elements identified in a consultation paper developed by global financial services regulators as they examine the changing retail investment landscape.

The Australian Securities and Investments Commission (ASIC) has raised the issue as part of its involvement with the International Organisation of Securities Commissions (IOSCO) with a Retail Market Conduct Task Force having identified emerging concerns related to an “unprecedented surge in retail trading particularly by new investors”.

The review examined the driving forces underpinning the conduct such as increased gamification, widespread self-directed trading and the influence of social media on investor behaviour.

Commenting on the review, ASIC commissioner and co-chair of the IOSCO taskforce, Sean Hughes said it was a world-wide phenomenon and likely to be an ongoing challenge.

“Like ASIC, our counterparts around the world are observing common types of harmful behaviour include mis-selling, mis-labelling and misleading disclosure – all of which have the potential to undermine confidence and stability,” he said.

“The Retail Market Conduct Task Force has provided a timely opportunity to compare our experiences with other regulators and understand what innovative tools are being implemented successfully. “

“Australia’s experience indicates that a flexible and creative use of regulatory tools is important in acting quickly to disrupt misconduct.  We encourage a broad range of stakeholders – including retail investors, financial consumers and market participants – to engage with the IOSCO consultation.”