By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Board of the International Organisation of Securities Commissions (IOSCO) on Tuesday identified nine (9) sound practices for investment risk education initiatives in its final report on Sound Practices for Investment Risk Education.
The global securities regulator says it has long recognised investor education as a key strategy for enhancing investor protection, promoting investor confidence and fostering investor engagement in financial planning and decision-making.
“Investor education is complementary to other tools such as regulation, supervision and enforcement, and is recognised in IOSCO´s guiding principles for securities regulation. In 2013, IOSCO created Committee eight (8) to conduct its policy work on retail investor education and financial literacy,” IOSCO said in a statement.
It affirmed that risk related to investment fraud, an assessment of mandatory disclosure requirements, financial product advertising and the use of financial advisors were beyond the scope of this project.
The sound nine (9) practices identified in the report are focusing on influencing retail investor attitudes and behaviour, as well as knowledge, developing initiatives that take an evidence-based approach in response to the needs of retail investors, testing initiatives with the target audience and developing initiatives that reach people close in time to the making of investment decisions and that are promoted in a variety of ways to expand reach and interaction.
Other sound practices identified include sending clear messages that are adapted for different target groups (e.g. beginner and more savvy investors) and for the different ways people access information, using engaging content and delivery styles, designing activities that are current and up to date with emerging new technologies and developments in financial markets, developing where relevant investor education initiatives that complement regulatory actions to enhance impact and developing evaluation frameworks and measures at the outset and seek to evaluate outputs and outcomes.
According to the global securities regulator based on these practices identified, it recommended that members consider one or more of the “sound practices” outlined in this report, as forming part of a regulatory toolkit when designing and implementing their investment risk education strategies and programs.
Also, mmechanisms such as an online IOSCO portal, are developed and maintained to provide ongoing opportunities for IOSCO members to share learnings in relation to the evolution of various investment risk education initiatives across member jurisdictions.
The report suggested effective approaches to measuring and evaluating investment risk education activities for behavioural change.
Howard Wetston, vice chair of the IOSCO board, chair of the Committee on Retail Investors and chair of the Ontario Securities Commission said the report includes a wide range of case studies, innovative approaches and practices, to highlight how securities regulators educate and inform retail investors about risk as a key part of their investor protection objective.
“I trust that the report will be a helpful source for regulators in developing their own strategies for investment risk education,” he added.
