Advice scandal prevention requires investor differentiation
The prevention of advice crises in a post-Murray financial system will hinge on differentiating between wholesale and retail investors, an investor registry head believes.
Sophisticated Access founder Peta Tilse said the failure to properly distinguish between the two investor types has been behind expensive advisory scandals, with the crux of the problems coming down to issues like disclosure.
"If the Government adopts the recommendations in the Murray Report, it is going to be even more critical for financial product providers and distributors to distinguish between the different investor types," Tilse says.
"Getting this wrong means the consumer may not be getting the right levels of disclosure, or access to financial products. These issues have been at the core of some of the recent advisory scandals, and very costly to all parties involved."
Tilse said the recommendations from the recent Financial System Inquiry advocate "fair treatment" of investors and believes this includes recognising their distinction and acting accordingly.
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