FPSB, the financial planning body, urges investors to test before buying cryptocurrencies
- FPSB asks investors to test before buying crypto
- Agency believes crypto exposes consumers to risk and fraud
- He says investors are currently on their own, guided by marketing campaigns.
The world’s professional financial planning body, the Financial Planning Standards Board (FPSB), has recommended that investors perform financial tests before investing in complex products such as cryptocurrencies . The FPSB is an international body that aims to make society understand the importance and benefits of the financial planning process and how it can improve their lives. It awards various certifications related to planning, hence its relevance.
Today he presented a document with recommendations to the Retail Market an area or arena, online or offline, in which commercial dealings are conducted. Conduct Working Group of the International Organization of Securities Markets, IOSCO, about how regulators around the world could address a place where cryptocurrency can be sent to and from, in the form of a string of letters and numbers. the potential adverse impacts of the rise of complex financial products, technological innovation and social networks/in-fluencers.
As reported, the presentation of FPSB responds to the consultation led by IOSCO to inform the development of a regulatory toolkit for jurisdictions around the world to enhance efforts to prevent harm to retail investors.
More risks with crypto
FPSB’s presentation, which is based on feedback from 886 certified financial planning professionals in 13 different countries and territories and 16 FPSB member organizations with decades of experience.
“Financial fraud and scams are certainly not new, but the rapid emergence and evolution of crypto and other complex digital digital technologies are these electronic tools that have the ability to generate, store or even process data. assets means that the level of risk and exposure for retail investors is increasing.” said Dante De Gori, director of stakeholder engagement for the FPSB.
“Licensing and product regulation is struggling to keep up with this rapidly changing landscape, leaving financial planners unsure of their regulatory obligations and leaving retail investors on their own, guided by marketing campaigns, often with damaging consequences.”
In this way the FPSB presented a series of recommendations to the IOSCO Retail Market Conduct Task Force, which include the following:
1.- IOSCO should conduct research to better understand the correlation between investor status, whether ‘self-directed’ or ‘advised’ (i.e. acting on the recommendations of a financial planning professional), and the likelihood of the investor experiencing unmanageable / catastrophic financial losses when investing in complex products (due to poor investment performance (measured against appropriate benchmarks or having been the victim of a scam/fraud).
2.- If IOSCO members continue to allow self-directed investment in complex products, the ability of self-directed retail investors to access digital trading platforms should require successful completion of a “financial literacy test” to demonstrate a minimum level of education and financial capability.
3.- IOSCO members should develop appropriate safeguards, such as the need for the investor to obtain financial advice, before allowing the use of “leverage” in complex products.
Prohibitions and more
IOSCO members should prohibit the use of credit cards to purchase complex financial products. .
IOSCO members should establish a regulatory ‘sandbox’ for social media influencers (fin-fluencers) and publish those operating in the sandbox in a public register, i.e. a ‘Register of Qualified Fin-Fluencers’.
IOSCO members should proactively engage with influencers on social media and reinforce the boundaries within which influencers can operate, i.e. information only if they are not qualified to give financial advice.
IOSCO members should engage technology platforms to develop cooperative agreements to suspend or prohibit individuals, product providers and other organizations from using the platforms to defraud or defraud investors, or to violate securities laws.
8.-IOSCO should define ‘complex products’ in a way that can be adopted uniformly across IOSCO member territories to protect retail (in particular self-directed) investors.
As defined by IOSCO, all ‘complex products’ should be regulated.
10.-IOSCO should conduct an investigation into the change change — a concept relevant to cryptocurrencies that use the UTXO model — is the number of coins sent back to a user after they use their unspent outputs to initiate a transaction. in guidance for providers of ‘complex products’ to disclose (at the point of purchase) the percentage of retail investors who suffered a financial loss on the investment. The inquiry should consider an appropriate timeframe for disclosure, for example, the last 12 months, three years, five years or since inception. IOSCO members should introduce a cooling-off/interruption period for ‘self-directed’ retail investors who purchase a ‘complex product’, if such an investor protection mechanism does not already exist in the territory.
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