“AFCA does have a position [on this topic], which is why it’s been a consistent agenda at our members forums,” Hartney said.

“Our determination on this now is that when services are provided to an SMSF trustee, we consider that to be retail unless the balance is above $10 million. This means the asset and income tests set out in s761G(7) don't apply.”

Hartney added that in AFCA complaints 768719, 892655 and joint complaint 923475/1080719, the AFCA panel found that the classification of wholesale was incorrect but still took into account the complainant's level of sophistication and reduced the amount of compensation.

“The panel considered that the awareness and knowledge of the complainant that was demonstrated through the file warranted a reduction in compensation as they contributed to their loss.”

“AFCA found in these cases that an SMSF cannot be treated as wholesale unless it holds assets of at least $10 million and it is very comfortable with the way the law has been interpreted in these decisions.”

He added that AFCA applied the law as it stood, and whether legislative settings were correct or appropriate was not something it could comment on.

Shail Singh, lead ombudsman investments and advice for AFCA, said it was important to remember that even though the investor was experienced in these cases, the test does not require consideration of their actual experience and was to do solely with the value of assets.

“Even though the investor was experienced, that was taken into account in terms of contribution rather than in terms of making the assessment on wholesale,” Singh said.

“The other point to mention is this law has been around for quite some time. ASIC put out its media release in 2014 and there hasn't been much further guidance from it in this regard, but the law has remained the same. These cases have brought the issue up squarely, and that's why we've been considering them.”