Chris Hamblin examines the rules that surround this peculiar class of client in the financial hubs of Dubai, Singapore and Hong Kong and concludes that, far from being an excuse for corner-cutting, the entire subject is a troublesome minefield.

TOO MUCH TROUBLE?

In Eastern UK-influenced jurisdictions and elsewhere, one of the common features of the regulatory rules that surround ‘market professionals’ who are also high-net-worth investors is their complexity. It is absolutely vital for the bank in question to get the classification process right and private banks and asset management firms often get it wrong. It is also important to note that good regulatory compliance is no bar to the bank in question being sued for negligence for giving the high-net-worth client sub-standard advice. Yet another complicating factor is the fact that rich individuals the world over are notoriously reluctant to receive waivers through the post and send replies back in the right manner and in the right time-frame. The same goes for the various reports they have to handle. Private banks and fund firms might conclude that the classification of a customer as a ‘professional client/investor’ or an ‘expert investor,’ however prestigious it may sound, is more trouble than it is worth.