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ARTICLE · 21 FEBRUARY 2011

Changes to the wholesale/retail client distinction

McMahon Clarke
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In late January, the Treasury released an options paper (www.mcmahonclarke.com/ckfinder/userfiles/files/DM315546.pdf) as part of the future of financial advice reforms requesting feedback and comments for possible options for a new regime for the distinction between wholesale and retails clients.

AustraliaCorporate/Commercial Law
Chris Mee
Chris Mee
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Options paper released

In late January, the Treasury released an options paper (www.mcmahonclarke.com/ckfinder/userfiles/files/DM315546.pdf) as part of the future of financial advice reforms requesting feedback and comments for possible options for a new regime for the distinction between wholesale and retails clients.

GFC highlights problems with current regime

According to Treasury, problems with the definition of a wholesale client were exposed during the GFC as, according to Treasury, clients who did not have the necessary experience investing in complex financial products were able to access these on the wholesale market. Treasury specifically cites the example of the Parkes Council investing in collateralised debt obligations sold to it by Lehman Brothers. Because the Parkes Council was a wholesale client, there was no requirement for it to receive a prospectus or product disclosure statement about investing in CDOs. The Parkes Council made a $13.5 million

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