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Home Forums Australian Financial Services Licensing (AFSL) Forum Opt-In: Wholesale/Sophisticated/Professional Investors Reply To: Opt-In: Wholesale/Sophisticated/Professional Investors

#4629 Reply

David Court
Member

The opt-in requirement applies to ongoing service agreements that have been entered on or after 1 July 2013.  Under s962K of the Corporations Act 2001 (Cth), an AFS licensee or representative who enters into an ongoing fee arrangement with a client is required to give their client a written notice of renewal every two years.  This offers the client the opportunity to “opt in” within a 30 day period and renew that fee arrangement.  If the client fails to respond to the renewal notice or decides to opt out, the fee arrangement terminates.

 

An ongoing fee arrangement can arise when an AFS licensee or representative gives personal advice to a retail client and fees are to be paid for more than 12 months.  The opt-in requirement only applies to financial advisers giving personal advice to retail clients and does not apply to wholesale clients.

 

There are 5 eligibility tests for distinguishing between wholesale and retail clients. These tests are set out in our article at this link: The Legal Basis of the Wholesale / Retail Client Distinction.

 

If you require further information on the above, please contact our financial services team.

 

Author: David Court

 

Co-contributor: Joanne Lee

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