A CFP-associated board has recommended improved global oversight of cryptocurrency investments and complex financial products.
The Financial Planning Standards Board, the standards body for the global financial planning industry and owner of the international CFP certification program, has recommended increased testing and regulation for financial products, which are becoming increasingly complex. The recommendations were made to reduce fraud, fraud and investment errors, the board said today.
The recommendations were addressed to the International Organization of Securities Commissions (IOSCO), a coalition of organizations that regulate the global securities and futures markets. The recommendations have been sent to the Commission’s Retail Market Conduct Task Force.
“Financial fraud and fraud are certainly not new, but the rapid emergence and development of crypto assets and other complex digital assets means that the level of risk and exposure for retail investors is increasing,” said Dante De Gori, head of stakeholder engagement at das Financial Planning Standards Board, in a statement.
“Licensing and product regulation are struggling to keep up with this rapidly changing landscape, leaving financial planners in the dark about their regulatory obligations and leaving retail investors to be guided by marketing campaigns, often with damaging consequences,” he added.
Among the recommendations is a request for IOSCO to conduct research to learn more about how investing in complex products can harm investors, whether investors follow the advice of a financial advisor or invest on their own.
If IOSCO member organizations continue to allow self-directed investing in complex products, self-directed investors should be required to pass a financial literacy test to demonstrate a minimum level of financial literacy and ability, the Financial Planning Standards Board recommended.
The board added that IOSCO affiliates should ban the use of credit cards to purchase complex financial products.
IOSCO members should also mandate technology platforms to develop collaborative agreements to suspend or ban individuals, product providers and other organizations using the platforms to defraud or defraud investors or otherwise violate securities laws, the board said.
For self-determined private investors who buy a complex product, a reflection period should be prescribed, the board recommended.
Comments are closed.