Is a SMSF a wholesale or retail investor?

ASIC has reviewed its interpretation of when the trustee of a superannuation fund will be classified as a retail client or a wholesale client under sections 708(8) and 761G of the Corporations Act.

The difference is important in respect of disclosures required and investor protection available to the SMSF.

ASIC has announced that where the financial service relates to a superannuation product, a trustee of a SMSF will be classified as a retail client under the Corporations Act unless the fund holds net assets of at least $10 million at the time the service is provided.

If a financial service does not relate to a superannuation product, the Corporations Act general test will apply: the SMSF trustee will be a wholesale client if the trustee has a certificate from a qualified accountant stating they have net assets of $2.5 million or if the value of the investment is at least $500,000.

ASIC will take regulatory action where financial service providers miscategorise their clients and, for example, treat investors as wholesale clients based on net assets of $2.5 million without a certificate from a qualified accountant.

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