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Home Forums Australian Financial Services Licensing (AFSL) Forum Bought a book of clients and need to know whether to give them an FDS and RN?

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    Client Question: I run a financial planning business and I have recently bought a book of clients.  Do I need to give these clients a Fee Disclosure Statement (FDS) and a Renewal Notice (RN)?

    Response: In relation to the FDS, the answer is yes.  For clients that have been assigned to you, you will be required to give them an FDS for the 12 month period immediately following the period to which their last FDS relates.  Therefore, if clients are assigned during this 12 month period, the FDS must include information about the fees and services of the assignor, as well as your fees and services.  For this reason, you should ensure that in your agreement to purchase the book of clients, the assignor is required to provide you with all necessary information to enable you to give the client the next FDS.

    In relation to RNs, the situation depends on whether these clients were pre-1 July 2013 clients of the assignor.  If so, and you do not replace or make material amendments to the ongoing fee arrangement, the client will retain their pre-1 July 2013 status, and you will not need to provide them with an RN.  If the assigned clients are post- 1 July 2013 clients, or you replace or make amendments to the ongoing fee arrangement, you will need to provide the clients with an RN within the required time.

    There are significant consequences for getting the FDS and RN requirements wrong, including that the ongoing fee arrangement will terminate automatically in certain situations, and you will not be able to charge your ongoing fee.  If you have any doubts about whether you need to give a FDS or RN, you should seek legal advice.

    Author: Jesse Vermiglio

    Keep an eye out for the launch of our new Sydney office on Martin Place in July 2016!!  We are very excited about this opportunity to service our Sydney clients.

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