The International Organisation of Securities Commissions (IOSCO) has recently released its final report on "Suitability Requirements with respect to the Distribution of Complex Financial Products" (Report), which outlines the key principles in respect of the distribution of such products by intermediaries to retail and non-retail customers (wholesale clients).

While the recommendations of IOSCO are not binding on securities regulators, they do provide insights into how the Australian Securities and Investments Commission (ASIC) may approach guidance on similar issues.

Complex Products -

The Report broadly defines "complex financial products" as financial products, whose terms, features and risks are difficult to value and are not reasonably likely to be understood by a retail customer because of their complex structure. Examples of "complex financial products" include, but are not limited to, structured instruments, hybrid instruments and financial derivative instruments (eg credit default swaps). The term does not include conventional equities, conventional bonds, simple vanilla unit trusts and mutual funds and exchange-traded standardised derivatives contracts.