Amid concerns about the risks posed by complex, structured products to retail investors, global securities regulators are proposing an approach to improving investor protection.

The International Organization of Securities Commissions (IOSCO) published a consultation report today that analyses trends in the retail structured product market, and proposes a “regulatory toolkit” for IOSCO members to use to address the particular risks that these products may pose to retail investors.

IOSCO notes that several events, including the 2008 default on products following the failure of Lehman Brothers, highlighted the problems retail investors can face when dealing with structured products. In particular, regulators are concerned about investors’ understanding of these products, their design and disclosure, suitability, mis-selling and post-sale product controls.

“Complex products, due to their nature, can be difficult for investors to understand. This can lead to them being mis-sold, particularly when investors are searching for yield,” noted IOSCO chairman, Greg Medcraft.

In order to address these added risks, IOSCO is proposing a toolkit that sets out a potential regulatory approach to retail structured products; along with potential regulation for product design and issuance; disclosure and marketing; distribution; and, post-sales practices.

“This toolkit is a solid initiative to help members engage with their regulated populations on complex products, many of which are innovation driven,” said Medcraft. “It is an example of how IOSCO can support domestic solutions to globally common problems.”

The working group that prepared the paper includes QuĂ©bec’s Autorite des marches financiers (AMF). It was co-chaired by authorities from Australia and France, along with regulators from the U.S., UK, Japan, Germany, China, Portugal, Spain, Italy, Belgium, Switzerland, the Netherlands, Mexico, South Africa, India, and Hong Kong.

Comments on the paper are due by June 13.