Fee recipients must comply with the OFA consent obligations.

A fee recipient is:

• an Australian financial services (AFS) licensee or its representative who enters into an ongoing fee arrangement with a client, or
• if the licensee or representative has transferred (or ‘assigned’) their rights under the arrangement, the person who currently holds those rights (i.e. the ‘assignee’): see section 962C.

A fee recipient may outsource some of its administrative or compliance functions to a third-party agent. For example, an agent may provide a written consent form to a client on behalf of the fee recipient and arrange to deduct ongoing fees on behalf of the fee recipient. Where the fee recipient is an authorised representative of an AFS licensee and the client has given consent to the fee recipient to arrange a deduction, the AFS licensee can act as an agent for the fee recipient, and vice versa. However, the fee recipient will remain responsible for meeting the OFA consent obligations.

Trustees of regulated superannuation funds are also required to comply with the OFA consent obligations. They must only charge ongoing advice fees against a member’s interest in the fund where they comply with the OFA consent obligations: see section 99FA(1)(d) of the Superannuation Industry (Supervision) Act 1993.

An ongoing fee arrangement exists where:

• the fee recipient gives personal advice to a retail client
• the fee recipient and client enter into an arrangement, and
• under the terms of the arrangement, the client must pay the fee recipient a fee (however described or structured) during a period of more than 12 months: see section 962A.

The following examples are not ongoing fee arrangements:

• a payment plan meeting the requirements in section 962A(3), and
• an arrangement under which the only fee payable is:
• an insurance premium (see section 962A(4)), or
• a product fee (see section 962A(5)).

We recognise that licensees and advisers frequently enter into fixed-term agreements for charging a client fee for a period of 12 months or less. There are a range of factors that ASIC will consider in determining whether or not such an agreement is an ongoing fee arrangement.

In addition to the terms of the written agreement, these factors include but are not limited to whether:

• the agreement is limited to a fixed-term period of 12 months or less
• fees stop being charged at the end of the fixed-term period and do not exceed 12 months (e.g. because the adviser or licensee has back-office or administrative systems in place to turn off the fees by the end of the fixed-term period), and
• there is an understanding between the client and the adviser or licensee that the client will be charged for a period of 12 months or less. This can be demonstrated by information given to the client, including brochures and marketing material, and a general record of discussions with the client.

An ‘ongoing fee’ is any fee (however described or structured) that is paid under the terms of an ongoing fee arrangement between the fee recipient and the client: see section 962B.

We would not consider that there is an ongoing fee merely because the fee:

• has been disclosed in a Statement of Advice, or
• is an insurance commission where consent is provided for the purposes of the informed consent obligation in section 963BB(1).

A fee recipient who enters into an ongoing fee arrangement with a client must comply with the OFA consent obligations in Division 3 of Part 7.7A of the Corporations Act: see section 962.

These obligations include a requirement for fee recipients to obtain written consent from a client:

• to enter into or renew (as relevant) an ongoing fee arrangement, and
• for the ongoing fees that the client will be required to pay under the arrangement: see sections 962F and 962G(1).

The written consent to enter into or renew an ongoing fee arrangement must be signed by the client and dated, and the fee recipient must retain the consent or a copy of it: see section 962G(1).

The OFA consent obligations also require fee recipients to obtain the client’s written consent before they can deduct, arrange to deduct, or accept payment of, ongoing fees from a client’s account, unless the account is linked to a credit card or is a basic deposit product: see sections 962R and 962S.

The written consent for the fee recipient to deduct or arrange to deduct ongoing fees from a client’s account must be signed by the account holder and dated, and specify:

• the name of the account holder (i.e. the client name(s))
• the account number
• for each amount to be deducted:
• the amount to be deducted, or
• if the amount cannot be determined at the time of the consent, a reasonable estimate of the amount and an explanation of how it was worked out, and
• any requirements specified in regulations (noting that no regulations have currently been made for these purposes): see section 962T.

Note: The Minister has the power to approve a form or forms for deducting or arranging to deduct ongoing fees from an account: see section 962Y. However, no form(s) have currently been approved for this purpose.

The fee recipient must not deduct, or accept payment of, ongoing fees if, at the time of making the deduction or accepting the payment, the written consent has been withdrawn, ceased to have effect, or been varied so that the deduction cannot be made: see sections 962R(2) and 962S(6).

The fee recipient must not arrange to deduct ongoing fees from an account holder’s account with a third-party account provider unless it has given a copy of the account holder’s written consent to that account provider and, at that time, the consent had not been withdrawn, ceased to have effect or been varied so that the deduction could not be made: see section 962S(3).

Before obtaining consent to enter into or renew an ongoing fee arrangement, or to deduct, arrange to deduct, or accept payment of, ongoing fees, a fee recipient must disclose to the client, in writing, certain information: see Question 5.

Before a client enters into or renews an ongoing fee arrangement, or before a fee recipient deducts, arranges to deduct, or accepts payment of, ongoing fees from a client’s account, the fee recipient must disclose to the client, in writing:

• the name and contact details of the person who is the fee recipient under the ongoing fee arrangement
• an explanation of why the fee recipient is seeking the consent
• the maximum upcoming period before the consent ceases to have effect (see Question 12)
• information about the services that the client will be entitled to receive under the ongoing fee arrangement during the upcoming period
• for each ongoing fee that the client will be required to pay under the arrangement during the upcoming period either:
• the amount of the fee, or
• if the amount of the fee cannot be determined at the time of disclosure, a reasonable estimate of the amount of the ongoing fee and an explanation of the method used to work out the estimate
• the frequency of the ongoing fees during the upcoming period
• a statement that the ongoing fee arrangement can be terminated by the client at any time
• a statement that the arrangement will terminate, and no further advice will be provided or fee charged under it, if the consent is not given, and
• the date on which the arrangement will terminate if the consent is not given: see sections 962G(2) and 962T(a).

Fee recipients must also disclose information about any other matters prescribed by regulations: see section 962G(2)(j). However, no regulations have currently been made for these purposes.

Note: The Minister has the power to approve a form or forms for deducting or arranging the deduction of ongoing fees from an account: see section 962Y. However, no form(s) have currently been approved for this purpose.

If a fee recipient fails to comply with the OFA consent obligations, the ongoing fee arrangement will terminate: see sections 962F and 962WA.

If an ongoing fee arrangement terminates, the fee recipient must not continue to charge fees under the arrangement. Civil penalties apply to a breach of this requirement: see sections 962Z and 1317E.

Failure to comply with the obligation not to deduct, arrange to deduct, or accept payment of, ongoing fees without the client’s written consent is also subject to civil penalties: see sections 962R, 962S and 1317E.

A court may order payment of a penalty for breach of a civil penalty provision. For an individual, the penalty is the greater of:

• 5,000 penalty units, or
• three times the benefit obtained and detriment avoided because of the contravention.

For a body corporate, the penalty is the greater of:

• 50,000 penalty units
• three times the benefit obtained and detriment avoided because of the contravention, or
• 10% of annual turnover (capped at 2.5 million penalty units): see section 1317G.

Note: See Fines and penalties on the ASIC website for more information about penalties.

Yes. You can seek written consent to enter into or renew an ongoing fee arrangement, or to deduct, arrange to deduct, or accept payment of, ongoing fees from a client’s account electronically (e.g. by email or on a webpage): see section 110C(3)(da) and paragraphs 1.166–1.173 of the Revised Explanatory Memorandum to the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024.

Your client can also sign the written consent electronically by, for example:

• clicking a check box on a webpage in response to a statement such as: ‘By ticking the box, you consent to renewing the ongoing fee arrangement and to the charging of the ongoing fees that are set out in this document’, or
• sending you their written consent by email with their electronic signature attached.

However, a client cannot give consent verbally (e.g. a voice recording or verbal confirmation). This is because the law requires written consent: see sections 962G, 962R and 962S.

For more information about electronic disclosure, including good practice guidance, see Regulatory Guide 221 Facilitating digital financial services disclosures (RG 221). For information about electronic signatures, see Electronic signatures on the federal Attorney-General’s Department website.

If your client’s name (e.g. following marriage) or your name changes or your client’s or your contact details change after the consent has been signed, this does not cause their written consent to the ongoing fee arrangement to become invalid, provided the consent and arrangement remains the same in all other respects. However, it is best practice to notify the client of any change to your name or contact details, as a courtesy.

Likewise, if you have arranged for ongoing fees to be deducted from a client account with a third-party account provider and your client’s or your name or contact details change, you do not need to obtain a new written consent from that client to arrange for the fees to be deducted, provided the consent and arrangement remains the same in all other respects.

If you transfer the rights under an ongoing fee arrangement to a new fee recipient (e.g. following the sale or transfer of the advice business), this does not cause a client’s written consent in relation to that arrangement to become invalid, provided the consent and arrangement remains the same in all other respects.

This means that a transfer of rights does not automatically require a new written consent to be obtained. However, ASIC considers that, as part of a transfer of rights under an ongoing fee arrangement, clients should be notified of the change in fee recipient by both the existing and new fee recipient. The relevant communications should be clear, concise and effective, and remind clients that they can terminate their ongoing fee arrangement at any time.

Likewise, if you have received a transfer of rights under an ongoing fee arrangement and the ongoing fees are deducted from an account with a third-party account provider, you do not need to obtain a new written consent from the client to arrange for the ongoing fees to be deducted. Instead, you will be able to accept payments under the existing arrangement even though the fee recipient details will have changed, provided the consent and arrangement remains the same in all other respects and you have ensured that the third-party account provider has a copy of the original consent.

There is currently no prescribed form for written consents. However, the Minister has the power to approve one or more forms for the following purposes:

• entering into or renewing an ongoing fee arrangement, and
• deducting, or arranging to deduct, ongoing fees from an account: see section 962Y.

The Minister has not currently approved any such forms. However, if a form is approved by the Minister, that form becomes mandatory for collecting written consent: see section 962Y(2).

If a form is approved by the Minister, an account provider (other than the fee recipient under the ongoing fee arrangement) may request additional information from the fee recipient before deciding whether or not to deduct ongoing fees from an account. For example, the account provider may be the trustee of a superannuation fund and may request additional information as part of determining whether deduction of ongoing fees from the account is consistent with the Superannuation Industry (Supervision) Act 1993.

Yes. If you are required to give multiple forms or notices to the same person, you may combine the information into a single form or notice. However, the single form or notice must satisfy all of the requirements for each form or notice and clearly state the purposes for which it is being given: see section 962YA.

For example, if ongoing fees are to be deducted from multiple accounts, you may consolidate the required information into one or more consent forms.

If the client holds accounts with multiple third-party account providers, you should consider your privacy obligations when passing on confidential information in the written consent to different account providers, and seek independent legal advice if necessary.

At the time an ongoing fee arrangement is first entered into or renewed, clients and fee recipients may agree on a day (known as the ‘reference day’) which is used to determine the timeframe in which fee recipients can obtain written consent to renew an ongoing fee arrangement from their clients: see section 962H. The timeframe commences 60 days before the reference day and ends 150 days after the reference day.

For a reference day to have effect, it must be a day that is earlier than the anniversary of the day that the ongoing fee arrangement was entered into, and it must be disclosed to the client before they provide consent: see Question 5.

If a reference day is agreed on, its anniversary will be relied on to determine the timeframe in which a written consent can be signed going forward, unless the client and fee recipient subsequently agree on a different reference day.

This means that each year, a written consent that meets the requirements must be signed in the timeframe that starts 60 days before and ends 150 days after:

• the agreed reference day, or
• if no reference day has been agreed on, the anniversary of:
• the most recent reference day specified in a consent, or
• if no reference day has ever been specified, the anniversary of the day on which the arrangement was entered into.

The reference day should be relied on to determine the period in which the client is entitled to services under the ongoing fee arrangement and the period in which ongoing fees are to be paid. If the client and fee recipient agree on a different reference day, the services that the client is entitled to receive under the arrangement should be provided by that day.

Your client’s written consent will cease to have effect 150 days after the anniversary of the day the ongoing fee arrangement was entered into, or if a reference day applies (see Question 12), 150 days after that day, unless your client:

• terminates the ongoing fee arrangement at an earlier date, or
• gives a new written consent in relation to the arrangement.

If a written consent for you to arrange to deduct ongoing fees ceases to have effect, you must:

• notify the relevant account provider or account providers within 10 business days after the consent has ceased, and
• not continue to arrange to deduct further ongoing fees unless you have obtained a new written consent for these purposes from the client: see section 962V(2).

A fee recipient must not deduct, or accept payment of, ongoing fees if, at the time of the deduction, a written consent has ceased to have effect: see sections 962R(2)(c)(iii) and 962S(3)(d)(iii).

If you accept payment of ongoing fees from an account provider after a client’s written consent ceases to have effect, you have 10 business days from the date of payment to repay the amount into the client’s account: see section 962S(9). If you do not repay the amount, the client will have the right to seek a refund of that amount in court: see section 1317GB.

A new ongoing fee arrangement will generally be in place when both of the following conditions are met:

• the old arrangement is terminated and a new arrangement commences (these may occur on the same day), and
• the client signs a new written consent to enter into the new arrangement.

After the old arrangement is terminated, you must stop charging ongoing fees under that arrangement. You are also required to notify relevant third-party account providers within 10 business days of the termination that fees can no longer be deducted under the old arrangement: see section 962V(2). You are not required to keep providing services under the old arrangement.

The date that the new ongoing fee arrangement commences will generally be the date the client consents to entering into the new arrangement by signing a written consent that meets the requirements. Once a new arrangement is entered into, the old arrangement automatically terminates if it has not terminated already.

For information about renewing an existing ongoing fee arrangement, see Question 12.

A client can end an ongoing fee arrangement at any time, in writing: see section 962J.

An ongoing fee arrangement can also come to an end if:

• a written consent is not put in place before the end of 150 days after the anniversary of the day the ongoing fee arrangement was entered into, or if a reference day applies, 150 days after that day: see Question 12 and section 962F, or
• the fee recipient fails to comply with their OFA consent obligations (e.g. if the fee recipient deducts, or arranges to deduct, ongoing fees without first obtaining written consent): see Question 4 and sections 962F and 962WA.

If the ongoing fee arrangement terminates, no further fees can be charged under the arrangement and there is no obligation to continue to provide services to the client.

As a fee recipient, if your client holds an account with you from which you intend to deduct ongoing fees, you must first obtain written consent to deduct those fees: see section 962R.

If your client holds an account with a third-party account provider (e.g. a superannuation trustee or responsible entity of a managed investment scheme) from which you intend to arrange to deduct ongoing fees, you must first obtain written consent from the client to arrange the deduction: see section 962S(3).

Before you accept payment of ongoing fees deducted from a client account with a third-party account provider, you must be satisfied that the client consent for you to arrange the deduction has not been withdrawn, been varied to prevent the deduction from being made or expired: see s962S(6).

Yes. If a third party is arranging a deduction of ongoing fees from a client’s account on behalf of the fee recipient as its agent, and the client has given consent to the fee recipient to arrange such a deduction, the account provider can rely on the consent given through the third party: see section 962S(2).

For example, if you are a representative of an AFS licensee and your client has given you their written consent, the AFS licensee can act as your agent and rely on the written consent to arrange with an account provider to have ongoing fees deducted from the client account. Or, if you are an AFS licensee, your representative may act as your agent and rely on a written consent given to you to arrange deduction of ongoing fees from the client account with an account provider.

Where there is more than one account holder (e.g. a couple), the fee recipient must:

• satisfy the OFA consent obligations (see Question 4) in relation to all joint account holders, and
• be satisfied that the written consent has not been withdrawn or varied to deny the fee deduction, and has not expired for each joint account holder before deducting, arranging to deduct, or accepting payment of, ongoing fees from the joint account: see sections 962R(3), 962S(4) and 962S(7).

Your client may withdraw or vary their consent for you to deduct, arrange to deduct, or accept payment of, ongoing fees from their account at any time by giving you written notice (e.g. by email, SMS or any other written form): see section 962U(1).

You must within 10 business days of receiving this written notice:

• give written confirmation to the client that you received the notice, and
• if a copy of the consent was provided to a third-party account provider, give the account provider a copy of the notice: see section 962U(2).

If your client gives notice to the third-party account provider asking them to stop deducting ongoing fees from their account, the third-party account provider should immediately stop deducting ongoing fees when they receive this notice. If the third-party account provider is a superannuation trustee, the trustee will need to stop deducting ongoing fees from their member’s account as part of their existing obligations.

It is best practice to have arrangements with any account provider offering an account to your client that has ongoing fees deducted from it so that you are made aware in a timely manner when a client gives notice to an account provider withdrawing their consent.

You must stop deducting, arranging to deduct, or accepting payment of, ongoing fees from your client’s account if the client’s written consent has:

• been withdrawn
• been varied in any way that does not allow for the deduction to be made from the account, or
• ceased to have effect because:
• the consent has expired
• the ongoing fee arrangement has terminated (see section 962F), or
• a new consent has been given: see sections 962U and 962V.

The following records must be kept in relation to ongoing fee arrangements for at least 5 years:

• each consent given by a client to enter into or renew an ongoing fee arrangement
• any notification from a client to renew, not renew or terminate an ongoing fee arrangement, and the date on which the notification was given
• the information disclosed to the client under the OFA consent obligations (see Question 5), and
• if an ongoing fee arrangement has terminated, the date on which it terminated and the basis on which it terminated: see regulation 7.7A.11AA(2).

You must keep the following records in relation to written consents to deduct ongoing fees from client accounts for at least 5 years:

• each written consent given to you by a client, including the date when the consent was given (e.g. if the client provides their written consent by ticking a box on a webpage, you can keep a timestamped screenshot of that page as evidence of the client’s written consent)
• each notice to vary or withdraw a written consent given to you by a client, including:
• the date you were given the notice, and
• the date you confirmed you had received the notice
• communications from you (e.g. emails, SMS and letters) about giving the third-party account provider:
• a copy of the written consent
• a copy of a notice to withdraw or vary the consent, and
• written notice of when the consent ceases, and
• details of any arrangement between you and an account provider: see regulation 7.7A.11AA(3).

Records of electronic documents must also be kept. For example, you can keep an image of an SMS including the sender’s name and date of receipt.

Where a consent given by a client to enter into or renew an ongoing fee arrangement and a consent given by the same client to deduct ongoing fees is combined in the same form or notice (see Question 11), record of the consents may be combined in the one document.

If you are a representative of an AFS licensee, the licensee should also keep or have access to the records, to allow them to monitor compliance with their OFA consent obligations: see section 912A(1)(ca).

Failure to comply with the record-keeping obligations for ongoing fee arrangements is a criminal offence, punishable for individuals by up to 5 years imprisonment and/or a fine of 120 penalty units, and for bodies corporate a fine of 1,200 penalty units: see section 962X(1).

Note: See Fines and penalties on the ASIC website for more information about penalties.

No. ASIC does not have any exemption or modification powers in relation to Division 3 of Part 7.7A of the Corporations Act. As a result, we cannot provide relief from the OFA consent obligations.