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.
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