AFCA has stated its view that SMSFs are wholesale investors is based squarely on the law and it has yet to see a viable counterargument.
The decision by the Australian Financial Complaints Authority (AFCA) to view SMSFs as wholesale investors was one it could not sidestep and is consistent with the law, according to one of its senior figures.
AFCA investments and advice lead ombudsman Shail Singh restated the case for why the external dispute resolution body decided an SMSF must have $10 million in assets, rather than $2.5 million, to be a wholesale investor noting the Corporations Act demands that view.
Speaking at the recent SMSF Association National Conference 2026 in Adelaide, Singh said: “We are independent from the Australian Securities and Investments Commission and from government, but what we’re charged with is resolving disputes between a consumer and a financial firm.
“We were forced into a position with the retail/wholesale distinction where the issue was squarely raised to make a decision on this issue,” he added, noting AFCA relied on the definitions of retail and wholesale investors in chapter seven of the act.
“For ‘wholesale’ there are a number of categories and being professional is one, so if you have an Australian financial services licence, for example.
“If you are a sophisticated [investor] is another, which means a financial firm has to check that you understand certain [investment] concepts before agreeing to your sophistication level. The third way is the wholesale by net worth or by $2.5 million in net assets.
“There is also a provision in section 761G(6) that says if the advice provided or the financial service relates to a superannuation product, then the super fund must hold $10 million in assets to be treated as wholesale.
“What that says to me is that [provision] overrides the wholesale by net wealth of $2.5 million [definition].
“The real debate is if advice to an SMSF is advice in relation to a super product and we have taken the view any advice to an SMSF relates to a super product.”
He noted AFCA has faced pushback on this view, but has not been presented with a good case as to why its view should change.
“Despite big-firm lawyers telling me we are wrong with this, no one has actually provided any basis for why that is based on the interpretation of the law,” he added.
“In every case the financial firm has an opportunity to do that, they can provide us with a submission, which we will consider, to show whether or not that interpretation is correct.
[SMSF Association chief executive] Peter [Burgess] has referred to it as doubling down on this position. I wouldn’t call it that. This situation has arisen a number of times across a number of decisions and we’ve seen nothing which would dissuade us this is not the position.”
 
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
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