Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.1 - PRELIMINARY  

Division 2 - Meaning of some terms relating to financial services and markets  

SECTION 761G   MEANING OF RETAIL CLIENT AND WHOLESALE CLIENT  

Providing a financial product or financial service to a person as a retail client

761G(1)    

A financial product or a financial service is provided to a person as a retail client unless subsection (5) , (6) , (6A) or (7) , or section 761GA , provides otherwise.

Note: The references in this section to providing a financial product to a person are not to be taken to imply that the provision of a financial product is not also the provision of a financial service (see the meaning of dealing in section 766C ).

Acquiring a financial product or financial service as a retail client

761G(2)    

A person to whom a financial product or financial service is provided as a retail client is taken to acquire the product or service as a retail client.

Disposing of a financial product as a retail client

761G(3)    

If a financial product is provided to a person as a retail client, any subsequent disposal of all or part of that product by the person is a disposal by the person as a retail client.

Wholesale clients

761G(4)    

A financial product or a financial service is provided to, or acquired by, a person as a wholesale client if it is not provided to, or acquired by, the person as a retail client.

General insurance products

761G(5)    

If a financial product is, or a financial service provided to a person relates to, a general insurance product, the product or service is provided to the person as a retail client if:

(a)    either:

(i) the person is an individual; or

(ii) the insurance product is or would be for use in connection with a small business (see subsection (12) ); and

(b)    the general insurance product is:

(i) a motor vehicle insurance product (as defined in the regulations); or

(ii) a home building insurance product (as defined in the regulations); or

(iii) a home contents insurance product (as defined in the regulations); or

(iv) a sickness and accident insurance product (as defined in the regulations); or

(v) a consumer credit insurance product (as defined in the regulations); or

(vi) a travel insurance product (as defined in the regulations); or

(vii) a personal and domestic property insurance product (as defined in the regulations); or

(viii) a kind of general insurance product prescribed by regulations made for the purposes of this subparagraph.

In any other cases, the provision to a person of a financial product that is, or a financial service that relates to, a general insurance product does not constitute the provision of a financial product or financial service to the person as a retail client.

Products and services relating to superannuation and RSAs

761G(6)    

For the purposes of this Act:

(a)    

if a financial product provided to a person is a superannuation product or an RSA, the product is provided to the person as a retail client; and

(aa)    

however, if a trustee of a pooled superannuation trust provides a financial product that is an interest in the trust to a person covered by subparagraph (c)(i), the product is not provided to the person as a retail client; and

(b)    

if a financial service (other than the provision of a financial product) provided to a person who is not covered by subparagraph (c)(i) or (ii) relates to a superannuation product or an RSA, or is a superannuation trustee service, the service is provided to the person as a retail client; and

(c)    

if a financial service (other than the provision of a financial product) provided to a person who is:

(i) 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

(ii) an RSA provider;

relates to a superannuation product or an RSA, or is a superannuation trustee service, that does not constitute the provision of a financial service to the person as a retail client.

Traditional trustee company services

761G(6A)    

If a financial service provided to a person is a traditional trustee company service, the service is provided to the person as a retail client unless regulations made for the purpose of this subsection provide otherwise.

Other kinds of financial product

761G(7)    

If a financial product is not, or a financial service (other than a traditional trustee company service or a superannuation trustee service) provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the product or service is provided to the person as a retail client unless one or more of the following paragraphs apply:

(a)    the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of this paragraph as being applicable in the circumstances (but see also subsection (10) ); or

(b)    the financial product, or the financial service, is provided for use in connection with a business that is not a small business (see subsection (12) );

(c)    

the financial product, or the financial service, is not provided for use in connection with a business, and the person who acquires the product or service gives the provider of the product or service, before the provision of the product or service, a copy of a certificate given within the preceding 6 months by a qualified accountant that states that the person:

(i) has net assets of at least the amount specified in regulations made for the purposes of this subparagraph; or

(ii) has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year;

(d)    the person is a professional investor.

Offence proceedings - defendant bears evidential burden in relation to matters referred to in paragraphs (7)(a) to (d)

761G(8)    

In a prosecution for an offence based on a provision of this Chapter or Part 6D.3A , a defendant bears an evidential burden in relation to the matters in paragraphs (7)(a) to (d) as if those matters were exceptions for the purposes of subsection 13.3(3) of the Criminal Code .

Other proceedings relating to subsection (7) products - presumption in non-criminal proceedings of retail client unless contrary established

761G(9)    
If:

(a)    it is alleged in a proceeding under this Chapter (not being a prosecution for an offence), or in any other proceeding (not being a prosecution for an offence) in respect of a matter arising under this Chapter, that a particular financial product or financial service was provided to a person as a retail client; and

(b)    the product or the service is one to which subsection (7) applies;

it is presumed that the product or service was provided to the person as a retail client unless the contrary is established.

Note 1: There is no such presumption in relation to the provision of a product or service that is or relates to a general insurance product, a superannuation product or an RSA. Whether or not such a product, or a service relating to such a product, was provided to a person as a retail client is to be resolved as provided in subsection (5) or (6) , as the case requires.

Note 2: In criminal proceedings, a defendant bears an evidential burden in relation to the matters in paragraphs (7)(a) to (d) (see subsection (8) ).

Regulations and paragraph (7)(a)

761G(10)    
In addition to specifying an amount or amounts for the purposes of paragraph (7)(a) , the regulations may do either or both of the following:

(a)    deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products;

(b)    modify the way in which that paragraph applies in particular circumstances.

Regulations and paragraph (7)(c)

761G(10A)    
In addition to specifying amounts for the purposes of subparagraphs (7)(c)(i) and (ii) , the regulations may do either or both of the following:

(a)    deal with how net assets referred to in subparagraph (7)(c)(i) are to be determined and valued, either generally or in specified circumstances;

(b)    deal with how gross income referred to in subparagraph (7)(c)(ii) is to be calculated, either generally or in specified circumstances.

What happens if a package of general insurance products and other kinds of financial products is provided?

761G(11)    
If:

(a)    either:

(i) in a single transaction, 2 or more financial products are provided to a person; or

(ii) a single financial service provided to a person relates to 2 or more financial products; and

(b)    one or more, but not all, of the financial products are general insurance products;

subsection (5) applies to the transaction or service so far as it relates to the general insurance products, and subsection (6) or (7) , as the case requires, applies to the transaction or service so far as it relates to other financial products.

Definition

761G(12)    
In this section:

small business
means a business employing less than:

(a) if the business is or includes the manufacture of goods - 100 people; or

(b) otherwise - 20 people.