Wholesale/retail
Whether you're dealing with retail or wholesale clients is important. Financial services providers must generally give retail clients extra information, such as the Financial Services Guide and the Product Disclosure Statement.
Updated as at 11 March 2004.
For more on your obligations to retail clients, see our Disclosure page. Retail clients also have extra protections such as compensation and complaint handling procedures.
How is the distinction between retail and wholesale clients made?
There's a presumption in the legislation that a financial product or a financial service is being provided to a retail client. But there are exceptions where the presumption that a client is a "retail" client may not apply, because of the type of product or the client.
General insurance
There are special provisions that determine whether a person provided with general insurance is a retail client or a wholesale client. See our insurance page for more details.
Superannuation and RSA products
Superannuation and retirement savings accounts products, and services relating to those products, are taken to be provided to a person as a retail client unless the person is:
- the trustee of a superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme that has net assets of at least $10 million; or
- an RSA provider.
See also our superannuation page for more information on how the FSR regime affects the superannuation industry.
Other financial products
Again, it's presumed that the product or service is being provided to a retail client. There are four exceptions:
- Product value test
Where the price of the financial product (or the value of the financial product to which a financial service relates) is greater than the prescribed amount, which is $500,000 in most cases.
- Business test
A business will be a retail client if it employs less than:
- 100 people, if the business is or includes the manufacture of goods; or
- 20 people, in all other cases.
- Individual wealth test
This exception is based on the "sophisticated investor" concept contained in the pre-FSR Corporations Act. An individual is regarded as a wholesale client if a qualified accountant certifies that the person has:
- net assets of at least $2.5 million; or
- gross income for each of the last two financial years of at least $250,000.
This exception only applies where the product or service isn't provided for use in a business.
- Professional investors
This exception is also based on the fundraising disclosure exemption in the pre-FSR Corporations Act.
The exception covers:
- financial services licensees;
- bodies regulated by APRA;
- bodies registered under the Financial Corporations Act;
- trustees of superannuation funds, approved deposit funds, pooled superannuation trusts and public sector superannuation schemes under the Superannuation Industry (Supervision) Act with net assets of at least $10 million;
- people who control at least $10 million;
- listed entities and their related bodies corporate;
- exempt public authorities;
- investment vehicles which have been marketed to the public as such; and
- foreign equivalents of the above.
