The Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, has released Wholesale and Retail Clients Options Paper reviewing the distinction between retail and wholesale clients in the Corporations Act 2001.

The distinction between retail and wholesale clients has not been significantly updated in 10 years.

When buying financial products and services wholesale clients do not receive the same level of disclosure and protection as retail clients, as they are considered better informed and better able to assess the risks involved.

The options paper discusses the rationale for the review as well as requirements in comparable foreign jurisdictions before presenting a number of options for reform including:

* Retaining and updating the current system to recognise and account for problems experienced during the Global Financial Crisis
* Removing the distinction between retail and wholesale clients so that all clients receive protections and disclosures currently only afforded to retail clients
* Introducing a subjective “sophisticated investor” test based on the client’s experience and ability to understand the product as the sole distinction.

Submissions on the options paper are due by 25 February 2011.