Investors at higher risk of scams during coronavirus recession

Consumer complaints to the corporate watchdog have spiked by 20 per cent during the COVID-19 pandemic

Consumer complaints to the corporate watchdog had spiked by 20 per cent during the COVID-19 pandemic, ASIC chairman James Shipton told a parliamentary committee.

Fake crypto currency term deposit products and fake investment schemes featured strongly among the complaints to the ­Australian Securities & Investments Commission.

Mr Shipton said there was a “degree of vulnerability and strain” in households, which left them more vulnerable to scammers as well as to making “rash decisions”.

He said he was encouraged that “well over a million” consumers had visited the regulator’s MoneySmart website since the pandemic began.

Still, he flagged his concern about a “significantly bigger” uptick in retail investors involved in day trading and investing in complex financial products during the crisis.

“We would implore retail investors to be very careful, considered and cautious, and don’t go in too headstrong,” he said.

ASIC’s head of assessment and intelligence, Warren Day, pointed to the “prevalence of scams during this time of people working from home and being remote from each other and looking for investment opportunities online”.

Mr Shipton said ASIC was “actively monitoring” how the regulatory relief measures implemented to assist businesses during the pandemic were performing, and which could eventually be made permanent.

He said the special rules allowing for virtual annual general meetings were an example of regulatory relief which could outlive the health crisis.