Published on Jan 19, 2022 by Jaime Lumsden

Licensees have fewer obligations in relation to wholesale clients, but this doesn’t mean no obligations – it’s important to know the difference! Licensees have fewer obligations in relation to wholesale clients, but this doesn’t mean no obligations – it’s important to know the difference!

Licensees have fewer obligations in relation to wholesale clients, but this doesn’t mean no obligations – it’s important to know the difference!

Wholesale clients

A wholesale client is anyone who is not a retail client. The most common wholesale clients are:

  • Individual investors with a certificate issued by a qualifying accountant in the last 2 years certifying that the investor has $250,000 gross income per annum for each of the last 2 financial years or $2.5M in net assets (or is a company or trust controlled by a person who meets these criteria);
  • Investors who have been certified by a licensee as a sophisticated investor;
  • Investors who are financial service licensees, control assets of at least $10 million, or are listed entities, etc
  • Persons investing in (or recommended to invest in) a financial product with a value exceeding $500,000; and
  • Businesses having more than 20 employees (or more than 100 employees if the business is or includes the manufacture of goods).

While the financial services disclosures for wholesale clients are reduced, you should still be mindful not to engage in misleading or deceptive conduct. Although wholesale clients are deemed to have a certain level of sophistication for financial services, this does not apply to misleading or deceptive conduct, which uses a "reasonable person" threshold – that is, would a reasonable person, in the position of the client, be likely to be misled or deceived. You must have regard to the actual sophistication of the client in this sense, rather than assuming they have a default level of sophistication because they are a wholesale client.

Here are some general guidelines to help you avoid engaging in misleading or deceptive conduct.


If you are advertising a financial product, your advertising needs to be accurate. You cannot:

  • Lead consumers to a wrong conclusion;
  • Create a false impression; or
  • Make false or inaccurate claims.

You also can’t advertise a financial product as "equivalent" to another financial product unless this is factually correct, e.g. you cannot equate term deposits to debt securities, even if they are fixed interest. This is the case even if you later disclose that the products are different at a later stage, e.g. on your website, after an ad has directed a customer to that website.

This is especially true if you rely on AdWords, (i.e. paid advertisements that appear in Google search results). If your product appears as a search result when a user searches for a different financial product, you need to be careful that you are not misleading customers who click on the Adword.

If you want to use Adword searches for other financial products (beyond the ones you offer) then you should create ‘landing pages’ for each Adword search that immediately and explicitly explains to users the product that you offer, and how it is different to the financial product that the user searched for. If the products are not equivalent, you need to disclose this upfront also. This is because you cannot assume that consumers who search for term deposits will readily understand more complex products, like fixed interest securities, or appreciate that these products are not equivalent in terms of risk and other features.

Mayfair companies

If ASIC considers that your advertising is misleading and deceptive, they will take action to address this, as was the case for the Mayfair group.

ASIC commenced court actions in the Federal Court against companies in the Mayfair 101 group, alleging that its website and online media advertisements were misleading and deceptive.[1]

Among other statements, the Mayfair companies stated that their debenture products (a form of debt instrument) were comparable to bank terms deposits, and had a similar risk profile (when in fact the risk profile was significantly higher). As part of the court proceedings, ASIC won an injunction against the Mayfair companies, preventing them from using AdWords such as "bank term deposits" to direct customers to their products. ASIC alleged that the Mayfair products were marketed to wholesale investors who were inexperienced with these types of products and unlikely to understand the significant risk associated with them.


To avoid misleading conduct, you need to consider your advertising and disclaimers. If a product is intended for wholesale clients only, this needs to be disclosed.

The disclaimer needs to be sufficiently prominent and obvious to convey all the key information on the first viewing of an advertisement.

If you are concerned about your advertising or disclaimers, please let us know. We can provide advice on how to ensure your advertising is not misleading or deceptive.

January 2022

Subscribe now to The Fold's blog alerts

Subscribe to The Fold's Blog Alerts and receive $50 off your next purchase from our eStore.

Please prove you are not a robot.