ASIC's crackdown on high-risk debentures has yielded a positive outcome for retail investors, with debenture issuers now disclosing more investment information, a new report by the corporate regulator has found.
Yesterday, ASIC released the third point of its action plan in the form of the Report 127 Debentures - Improving disclosure for retail investors.
ASIC Chairman Tony D'Aloisio said the new guidance from ASIC had greatly improved the quality of disclosure to retail investors.
"Investors are now presented with improved information on the fundamentals of this type of investment. This information will assist them to make choices about their investment and better assess risks, particularly the risk of capital return," D'Aloisio said.
"ASIC takes the approach that Australia's retail investors, when given clear information such as the type now required of unlisted and unrated debentures, are capable of making sound decisions."
The regulator also released the report, Report 126 Understanding investors in the unlisted unrated debenture market, yesterday to better understand the profile and motivations of investors in unlisted and unrated debentures.
According to the report's findings, investors considered the return/interest rate, the perceived low level of risk and the protection of funds invested the most important investment features for debentures.
Nearly half the investors in this type of product were investing to produce income for their retirement or long-term savings.
ASIC intends to use the findings of the research to improve investor education.
The regulator also plans to monitor the disclosures made by issuers in the next 12 months and develop further investor education initiatives.
ASIC expects to conduct further visits with issuers in October this year and will provide another report in April 2009.
ASIC's crackdown on debentures began late last year when the regulator called on issuers to disclose against eight benchmarks on an 'if not - why not' basis in their prospectuses and ongoing disclosures under the Regulatory Guide 69 Debentures - Improving Disclosure for Retail Investors.
