Billions of dollars of hybrid securities issued to retail investors by the major banks will eventually cause problems for the financial system, according to outgoing chairman of the Australian Securities and Investments Commission Greg Medcraft.

In an interview with The Australian Financial Review to mark his six-and-a-half years as chairman, Mr Medcraft said hybrid securities were a "ridiculous" product for retail investors. He said it was notable that they had been banned for retail investors in other markets such as the United Kingdom.