Wholesale rules a missed opportunity
The Financial Services Legislation Amendment Bill keeps the same set of "wholesale client" definitions as exist under the Financial Advisers Act, including a threshold that dictates any entity with net assets over $1 million will qualify.
That has prompted concerns that many property-owning Auckland family trusts may qualify. Those dealing with wholesale clients do not have to meet the same regulatory obligations as advisers catering for the retail market.
By comparison, the Financial Markets Conduct Act bumped up the "wealthy person" test under the old Securities Act from net assets of $2 million to $5m when it was introduced.
That was expressed at the time as being partly to remove mortgage-free homeowners and Lotto winners from being automatically treated as wholesale.
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