Wholesale/retail definition critical to FSI

Wholesale/retail definition critical to FSI

If the government adopts key FSI recommendations there will be a greater need for clarification between retail and 'sophisticated' investors, argues an investor certifier.


Sophisticated Access, an online investor certification service provider, said the FSI’s blueprint for the next few decades focuses on fair treatment of consumers by financial product issuers and distributors.

Although founder of the service Peta Tilse said the key to this fair treatment is a clearer distinction between which investors are retail and which are sophisticated or wholesale.

“If the government adopts the recommendations in the Murray Report, it is going to be even more critical for financial product providers and distributors to distinguish between the different investor types,” Ms Tilse said.

“Getting this wrong means the consumer may not be getting the right levels of disclosure, or access to financial products.”

“These issues have been at the core of some of the recent advisory scandals, and very costly to all parties involved,” she said.

Sophisticated Access pointed out that wholesale or sophisticated investors receive priority access to institutional deals including pre-IPO offers, private placements, property syndicates and structured investment products.

“They can also participate in new peer-to-peer lending models and crowdfunding initiatives but they lose retail investor disclosure protections,” a statement from Sophisticated Access said.

“To become a sophisticated investor, the Corporations Act requires an investor’s accountant to sign a Qualified Accountants Certificate (Investor Certificate) verifying the investor has at least $2.5 million of net assets, or has earned $250,000 per annum in the past two years,” it said.

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