Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 7.1.18

Retail clients and wholesale clients: price of investment-based financial products

             (1)  This regulation makes arrangements about the price for the provision of an investment-based financial product.

Note:          Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless 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 that paragraph as being applicable in the circumstances.

                   Under paragraph 761G(10)(a) of the Act, the regulations may also 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.

                   In general, the 'price' of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G(7)(a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500 000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.

Price

             (2)  For paragraph 761G(7)(a) of the Act, the amount applicable in relation to an investment-based financial product is $500 000.

Working out price: general rule

             (3)  For paragraph 761G(10)(a) of the Act, the price of an investment-based financial product:

                     (a)  is the amount that is paid or payable to acquire or purchase the investment-based financial product; and

                     (b)  does not include any amount paid for or in respect of the investment-based financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.

Note:          An amount deposited in a deposit account will not generally be regarded as part of the 'price' paid to acquire or purchase the financial product.

             (4)  For subregulation (3), in calculating any amount payable or paid to acquire or purchase the investment-based financial product:

                     (a)  disregard any amount payable to the extent to which it is to be paid out of money lent by:

                              (i)  the person offering the investment-based financial product; or

                             (ii)  an associate of that person; and

                     (b)  disregard any amount paid to the extent to which it was paid out of money lent by:

                              (i)  the person offering the investment-based financial product; or

                             (ii)  an associate of that person; and

                     (c)  include any amount paid or payable to cover:

                              (i)  fees or charges that are paid to the issuer or any other person that relates to the issue of the investment-based financial product; and

                             (ii)  fees or charges that are paid to the issuer or any other person that relates to the issue of the investment-based financial product; and

                     (d)  despite paragraph (c), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:

                              (i)  the client; or

                             (ii)  another person acting on behalf of the client.

Group products

             (5)  If the investment-based financial product is a group product covered by section 1012H of the Act:

                     (a)  the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the investment-based financial product; and

                     (b)  subregulation (3) is to be used to determine the amount to be paid for the person to be covered by the investment-based financial product.



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