A crackdown on high-risk debentures would be broadened to include property-related managed investment schemes (MIS) under plans being considered by the corporate watchdog.
But industry stakeholders say the regulator's three-pronged plan to clean up the $8 billion market does not go far enough.
Yesterday, ASIC released draft new rules for unlisted and unrated debentures following a string of company collapses.
Under the proposals, disclosure about risks would be tightened, credit ratings would need to be obtained and strict advertising rules would apply from December 1, 2007.
Advertisements for debentures will no longer be able to use the terms 'secure', 'safe', 'guaranteed' or 'deposit' or that they are suitable for a particular type of investor.
Product issuers would need to put systems in place to ensure investors' money are only on-lent to property developers where there is satisfactory progress if the development based on reliable external evidence.
The regulator has been criticised for failing to stop the crashes of the Westpoint group, Fincorp, Bridgecorp and Australian Capital Reserve, which have led to consumer losses of up to $1 billion.
"We do express concern that none of the measures announced would seem to deal directly with the problems identified in the Westpoint group collapse," Perth financial services lawyer Mark Halsey said.
Halsey said the problem stems from the fact that in June 2006, the Court of Appeal of the Supreme Court of Western Australia ruled against ASIC's position and found that Westpoint's promissory notes were not debentures but managed investment schemes.
"There continues to [be] an ongoing potential risk for both financial advisers and their clients until improved disclosure applies to these interest-bearing products," he said.
Over the coming months ASIC will consider broadening the new rules to apply to property-related MIS products, a spokesman said.
The FPA's chief executive Jo-Anne Bloch welcomed the guidance but said disclosure should be extended to the point of sale.
She said the product's application form should notify consumers about the importance of seeking financial advice and that the investment may involve a higher risk of loss.
More than 90 product issuers would have to abide by the new rules, according to ASIC data.
