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

27 Pages Posted: 21 Jul 2020

See all articles by Wai Yee Wan

Wai Yee Wan

City University of Hong Kong (CityUHK) - Centre for Chinese & Comparative Law; Singapore Management University - School of Law

Andrew Godwin

Centre for International Finance and Regulation (CIFR); Melbourne Law School, The University of Melbourne

Qinzhe Yao

affiliation not provided to SSRN

Date Written: March 2020

Abstract

In Singapore, Hong Kong, and Australia, standard retail investor protection laws do not apply to special categories of individual investors, which are broadly based on wealth or income. Prospectuses are not required for the sale of financial products to these investors and they do not have the full benefit of advice relating to the suitability of these products. 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. We explore the rationale behind the special categories, the implications of falling into these categories and the appropriateness of the current framework. We argue that the existing criteria 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.

Suggested Citation

Wan, Wai Yee and Godwin, Andrew and Yao, Qinzhe, When is an Individual Investor Not in Need of Consumer Protection? Comparative Analysis of Singapore, Hong Kong, and Australia (March 2020). Singapore Journal of Legal Studies, Mar. 2020, pp 190-216, Available at SSRN: https://ssrn.com/abstract=3649809

Wai Yee Wan (Contact Author)

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

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

Singapore Management University - School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

Andrew Godwin

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Melbourne Law School, The University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria
Australia

Qinzhe Yao

affiliation not provided to SSRN

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