In November 2021, the ALRC published its first (interim) Financial Services Legislation Report setting out a range of proposals for the simplification of financial services law. In this context, the ALRC recommended reform to the definition of "retail client"; namely:
- the removal of the product value and the income/asset tests; and
- the removal of exemptions in relation to general insurance products, superannuation products, RSA products, and traditional trustee company services.
Our team has made a formal submission to the ALRC in respect of reform on the "retail client" definition. It is our submission that changing the definition of "retail client" in the manner proposed could have adverse consequences for industry participants, and that the purpose of the FSR Bill could be better implemented through:
- retaining, but updating, the existing quantum-based exemptions;
- ensuring that certain categories of investors are deemed wholesale clients, irrespective of the type of financial product; and
- making minor amendments to the sophisticated investor tests.
We also submit that the general insurance product provisions should be largely left alone.
If you would like to read a copy of our full submission, download a copy here.
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