Special Rule for Superannuation Funds
The Corporations Act includes a specific provision for superannuation funds. Where a SMSF receives an advice on a superannuation product, it is a retail client unless the superannuation fund has net assets of at least $10 million (s761G(6))
This $10 million rule caused confusion. In 2014, ASIC issued Media Release 14-191MR, stating it would not take enforcement action where SMSFs accessed wholesale offers under the lower $2.5 million test, provided all other obligations were met. Many SMSF trustees have since relied on that interpretation.
The Impact of the 2022 AFCA Determination In a pivotal ruling (AFCA case number 801229), AFCA found that an SMSF trustee who received financial services about their superannuation fund was wrongly classified as a wholesale investor under the $2.5 million test. AFCA held that the trustee should have been treated as a retail client because the SMSF did not have at least $10 million in net assets.
This determination has several consequences:
· It casts doubt on the long-standing reliance on ASIC’s informal guidance.
· Trustees could be retrospectively treated as retail clients, giving them access to AFCA’s complaint resolution scheme.
· SMSFs may be required to unwind or re-document investments made on a wholesale basis.
· Some investment providers may now require stricter due diligence or refuse SMSFs unless the $10 million threshold is met.
Strategic Support from Westcourt
At Westcourt Family Business Accountants, we specialise in guiding SMSF trustees through complex regulatory frameworks. From reviewing trust deed structures to assessing investment classification pathways, we can help you stay compliant while preserving strategic investment flexibility.
If you’re uncertain about your wholesale investor status or want to explore how to structure your SMSF to optimise investment access, speak to our SMSF specialists today.
At Westcourt, we are qualified to sign off on wholesale investor certificates.
Click Here for Part 1: Is your SMSF a Wholesale Investor or not, and why it matters.
Click Here for Part 2: How to acquire a Wholesale Investor Certificate
Click Here for Part 4: Other Pathways to Wholesale Investor Status
