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Brokers question high net worth definition

Brokers have criticised the Financial Services Authority’s definition of high net worth individuals in the Mortgage Market Review.

In the paper the FSA defines high net worth as someone earning more than £1m or holding assets worth more than £3m. The FSA is proposing that high net worth clients do not need advised sales and should be exempt from restrictions on interest-only loans.

Hugh Wade-Jones, director at Enness Private Clients, says the definition is on the high side.

He says: “Assets of £3m are probably about right but £1m income is heavy. We would define it as £500,000 rather than £1m. With assets many could hit the level because of a few choice investments in property during the boom but it is rare for someone to earn £1m.”

Wade-Jones also says financially sophisticated individuals such as those working in financial services should have similar exemptions.
Ian Gray, director at, says many private banks define high net worth as assets worth £1m and income of £300,000.

He says: “The MMR definition is high because it should be related to the debt levels of individuals. You can’t put a number on it and say £3m assets because what if they have a £5m mortgage?”

Gray also questions why the FSA is exempting high net worth individuals from advice.

He says: “It is a different type of advice but it is still needed. Some people have no idea about mortgages because they may have made their money outside finance.”


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  • Hugh Wade-Jones 20th February 2012 at 2:57 pm

    Hi Ian, I think you might have missed the point on this somewhat. Assets of course will be net, excluding liabilities, and again it’s not about simply excluding themselves from the advisory process but allowing the HNW to go outside the boundaries of normal lending rules because of the more complex structure of the products/deals. For example an annually reviewable facility for someone placing money on account to make up a potential income shortfall for a HNW will fall outside standard guidelines but is common place at many private banks. Just really formalising and giving greater flexibility to the deals that I assume your company places every day so not sure why you would oppose it!?


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