AFCA’s Stance on SMSF Client Classification
The Australian Financial Complaints Authority (AFCA) has reiterated its position on classifying Self-Managed Super Funds (SMSFs) as wholesale or retail clients, emphasizing that an SMSF must hold $10 million or more in assets to be legally considered a wholesale investor. This threshold is the sole determinant for classification, meaning SMSFs with assets below this amount are treated as retail clients, regardless of the trustees’ investment experience or personal wealth. While ASIC previously indicated it might not strictly enforce the wholesale classification requirement, AFCA highlights that this does not prevent consumers from lodging complaints, and the investor’s sophistication may only influence the level of compensation awarded, not the initial client classification. Read more here.
Policies affected: Advice Providing policies or Client Classification policies
Organisations affected: Advice providing AFSL holders
Further Relief in ASIC’s Reportable Situations Regime
ASIC has provided further targeted relief for Australian financial services (AFS) and credit licensees under the reportable situations regime. These changes aim to reduce the reporting burden on licensees by exempting certain breaches of misleading and deceptive conduct provisions and civil penalties from mandatory reporting. Additionally, the timeframe for internal investigations before a report becomes necessary has been extended from 30 to 60 days. The updates also clarify that a comprehensive report lodged with APRA will be considered lodged with ASIC for dual-regulated entities, streamlining compliance. Read more here.
Policies affected: Incident and Breach Reporting Policies
Organisations affected: AFSL holders
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