Australian Financial Services Licensing (AFSL) Forum

#3252 Reply

Mark Harbert
Member

Section 962 of the Corporations Act defines what an ongoing fee arrangement is for the purposes of Fee Disclosure Statements under the Act. Section 962 states that:

(1)  This Division applies in a case where:

(a)  a financial services licensee, or a representative of a financial services licensee, enters into an ongoing fee arrangement with another person (the client ); and

(b)  the arrangement has not terminated for any reason.

Section 962H (1) in describing an FDS specifically states that it is in relation to ongoing fee arrangements.

In the hypothetical you have provided the ongoing fee arrangement has come to an end.  It will be irrelevant that the end date was close to the date when the FDS was to be produced.  Ultimately the client will enter into a new ongoing fee arrangement with their new planner and will be aware from the SoA what costs they will incur over the next 12 months.  One of the purposes for producing an FDS is to allow the client to identify if they are receiving value for money and to decide whether to change planners.  As the client has already changed planners an FDS takes on less importance.

 

For further information, please contact our office.

Author: David Court

Co-contributor: Mark Harbert

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