High-net-worth or 'sophisticated' investors should be acknowledged in a special category under NCCP to cut down on regulated disclosures, according to National Mortgage Brokers' Gerald Foley.
In a similar way to ASIC's treatment of clients in the managed investment market, Foley said 'sophisticated' clients should be acknowledged by the regulator as being more able to evaluate credit offers, negating the need to provide repeated disclosure documentation.
In the case of investments, advisers can deem clients 'sophisticated' when they have had a gross income of $250,000 or more in each of the past 2 years, or have net assets over $2.5m.
Proved via a certificate from an accountant, these investors are then understood to be able to evaluate offers of securities and some financial products without needing the protection of a regulated disclosure document.
"Through our broker audit process, we see many files where the borrower is arranging their 3rd, 4th or greater home or investment property loan, have significant incomes and/or a strong asset position," Foley said.
"For these customers I see no reason why similar guidelines to “sophisticated investor” rules could not be applied."
Foley said any proposed guidelines should exclude the family home under the definition of net assets.
"I hope the next round of reviews into the impact and effectiveness of the NCCP will see a preparedness to review the application of this legislation and whether there is an opportunity to recognise that the protection afforded under the NCCP is not required by all consumers," he said.
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