When Is an Individual Investor Not in Need of Consumer Protection? A Comparative Analysis of Singapore, Hong Kong, and Australia

36 Pages Posted: 16 Jan 2020

See all articles by Wai Yee Wan

Wai Yee Wan

City University of Hong Kong; City University of Hong Kong (CityU) - Centre for Chinese & Comparative Law

Andrew Godwin

Melbourne Law School

Qinzhe Yao

affiliation not provided to SSRN

Date Written: December 27, 2019

Abstract

In Singapore, Hong Kong, and Australia, standard retail investor protection laws do not apply to special categories of individual investors. Issuers and intermediaries can avoid preparing a prospectus and assessing the suitability of a financial product or investment when financial advice is given for these investors. However, with the increasing complexity of products and potentially unregulated alternative investments such as crypto-assets, this legal framework is increasingly being debated and challenged. More disclosure is not the answer.

This paper explores the rationale behind the special categories, the implications of falling into these categories from a consumer protection perspective and the current debates as to whether these special categories should continue to be recognised. The paper argues that the existing wealth or income based criteria that determine eligibility are anachronistic and inappropriate. Instead, all individuals making investment decisions should have the benefit of a rating framework that is based on both complexity and risks and be subject to a suitability test in the case of complex products.

Keywords: financial regulation; financial consumers; investor classification; securities regulation

JEL Classification: K22

Suggested Citation

Wan, Wai Yee and Godwin, Andrew and Yao, Qinzhe, When Is an Individual Investor Not in Need of Consumer Protection? A Comparative Analysis of Singapore, Hong Kong, and Australia (December 27, 2019). Available at SSRN: https://ssrn.com/abstract=3510134 or http://dx.doi.org/10.2139/ssrn.3510134

Wai Yee Wan (Contact Author)

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

City University of Hong Kong (CityU) - Centre for Chinese & Comparative Law ( email )

83 Tat Chee Avenue
Room P5300, 5th Floor, Academic 1
Kowloon Tong
Hong Kong

Andrew Godwin

Melbourne Law School ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

Qinzhe Yao

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
135
Abstract Views
523
rank
274,374
PlumX Metrics