You may or may not be aware that there are moves afoot by ASIC and Treasury to try and revise the definition of a “wholesale investor” by adjusting the wealth hurdles by which they are defined. Based on the preliminary press articles detailing the likely changes, many of our existing investors will be re-categorised as “retail investors”, legally excluding them from participating in HCP’s offerings.
As well as trampling on the rights of many of our investors, these changes would have a significant impact on our business and the funds management industry in general.
In March last year Stephen Jones, the Assistant Federal Treasurer, announced a review into property based managed investment schemes (MIS). The justification for the review were the actions of a firm called Sterling Property that operated property schemes and lost a significant amount of investors’ money some five to six years ago.
Despite the fact that Sterling operated in the “retail” space and held an AFSL, ASIC and Treasury have used this event to also justify a review into the actual definition of what constitutes a “wholesale” investor.
Read the press release by the Federal Assistant Treasurer.
This review is being done “under the radar”, without community consultation, and it is certainly against the best interests of those people that currently qualify as wholesale investors including many of our own investors.
If these changes to the criteria are approved, the non-bank lending sector, which provides significant funding to Australian businesses, will find itself starved of funds resulting in:
Large numbers of existing wholesale investors being prohibited from participating in investments that they have enjoyed in the past;
Financially competent, astute & savvy consumers will be forced into retail offerings with their commensurate higher compliance costs and lower returns;
Competition will be significantly lessened with the “top end of town” benefiting by driving out smaller Funds;
We are reaching out to all our investors regarding an important issue which could significantly impact our ability to operate as we currently do and we need your help.