Retail Client

Under the Corporations Act 2001, a retail client is any person or organization receiving financial services (including insurance) who is not classified as a wholesale client. Retail clients receive the full suite of consumer protections including: Product Disclosure Statements (PDS); Financial Services Guides (FSG); cooling-off rights; access to AFCA for dispute resolution; protections against conflicted remuneration; and the benefit of the duty to take reasonable care rather than the stricter duty of disclosure. Generally, retail clients are individuals purchasing insurance for personal, domestic, or household purposes, or small businesses with less than 100 employees (for general insurance) or less than 20 employees (for products regulated as financial products). The value threshold is also relevant - for example, wholesale clients must be investing at least $500,000 or have net assets of at least $2.5 million. The retail/wholesale distinction is significant because wholesale clients are presumed to have greater financial sophistication and resources, thus requiring fewer protections. Insurers and advisers must assess client classification and provide appropriate protections. Incorrectly classifying retail clients as wholesale to avoid obligations is a serious breach.