ACA concerned over margin loan surge

The Australian Consumers' Association is worried about the marketing of margin loans for shares to “unsophisticated investors”. Margin loans totalled a record $10 billion last year. Previously, these were marketed to people who had to have $30,000 up-front, the ACA's Catherine Wolzhuizen says, but now they're being marketed to anyone with a starting amount of $1,000 to $5,000 in hand. They're a high-risk product that's profitable for banks, she said, with lenders being able to call in loans at very short notice if share prices drop. Some investors have to sell at a loss if they're unable to top up contributions.

See InfoChoice’s Guide to margin lending