Compliance and General Administration - Opt-in Renewal Notices

Compliance and General Administration - Opt-in Renewal Notices

Opt-in Renewal Notices Overview

When must an opt-in renewal notice be given to a client?

Advisers must give an eligible client an opt-in renewal notice within 60 days of the opt-in renewal notice date.

  • Opt-in renewal notice date
    The opt-in renewal notice date is the 24-month anniversary of the date the client enters into the OFA.

  • Keep a record of the opt-in renewal notice given to the client
    In order to prove that advisers gave the client an opt-in renewal notice, they are required to keep a copy of the opt-in renewal notice in the client file.

  • Failing to give the client an opt-in renewal notice before the legislative deadline
    If advisers do not give an eligible client an opt-in renewal notice within 60 days of the opt-in renewal notice date, the OFA terminates on the day after the last day of the 60-day period. Advisers must not charge an ongoing advice once the OFA has terminated.

  • The client must renew the arrangement
    Advisers must give the client an opt-in renewal notice.

    The client must notify advisers in writing that they wish to renew the OFA before the end of the renewal period. If they do not, the OFA must be terminated.

    The renewal period is the 60-day period beginning on the day that advisers give the client an opt-in renewal notice.

  • If the client notifies you that they wish to renew the arrangement
    If the client notifies adviser in writing that they wish to renew the OFA, the OFA continues and adviser can continue to charge an ongoing advice fee.

    Advisers are required to keep the communication sent by the client renewing the OFA in the client file.

  • If the client does not respond within 30 days
    Although the adviser may give a client an opt-in renewal notice, the client may not respond within 30 days from receiving their opt-in renewal notice and FDS.

    In these circumstances, the legislation provides a further 30 days (“the grace period”) to cease charging ongoing advice fees. The grace period begins on the day immediately after last day of the 30-day period.

    Advisers can continue charging advice fees up until the last day of the grace period.

    The client is unable to renew the OFA during or after the grace period. In order to charge an ongoing advice fee after the end of the grace period, adviser and the client must enter into a new OFA.

 

What information must be included in an opt-in renewal notice?

Use the licensee-provided opt-in renewal notice template

The legislation mandates that certain information be included in the opt-in renewal notice template.

These five statements include:

  • A statement that the client may renew the OFA by giving you notice in writing of the election

  • A statement that the OFA will terminate, and no further advice will be provided or fee charged under it, if the client does not elect to renew the OFA

  • A statement that the client will be taken to have elected not to renew the OFA if the client does not notify you in writing of an election to renew before the end of the renewal period

  • A statement that the renewal period is a period of 60 days beginning on the day which the opt-in renewal notice and FDS is given to the client

Advisers are also required to include: the licensee’s name, ABN number, AFSL number and adviser details.

 

Remedial actions for non-compliance

  • Failing to provide an opt-in notice by the legislative deadline causes the OFA to automatically terminate and the charging of ongoing fees must be ceased

  • To continue providing ongoing services, a new ongoing service arrangement must be entered into

 

The maximum penalty for non-compliance is $50,000 for an individual or $250,000 for a corporation.

Once an OFA terminates, the adviser must cease charging ongoing fees as soon as practically possible. A record of the communications requesting to cease charging fees with the product provider must also be kept if the adviser cannot cease charging the fee on the day which OFA terminates.

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