The new Ongoing Fee Arrangement (“OFA”) regime will begin to be phased in from 10 January 2025, six months after it was introduced by the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (“DBFO Act”).
While fee recipients will no longer be required to provide their clients with an annual Fee Disclosure Statement, they will be required to seek their clients’ written consent to enter into an OFA (“Consent to Enter”), to renew an OFA (“Consent to Renew”) and for fees to be deducted from their account (“Consent to Deduct”).
A key difference between the old and new OFA regimes is that fee recipients now have the ability to amend each client’s anniversary day for the provision of their Consent to Renew (for example, to coincide with the end of the financial year).
However, due to a technical issue in the legislation, fee recipients do not currently appear to have the ability to amend a client’s anniversary day for the provision of their Consent to Deduct. This means that if a fee recipient were to amend a client’s anniversary day for their Consent to Renew, they would not be able to do the same for their Consent to Deduct. This would result in the two consents being linked to different anniversary days, materially complicating the fee recipient’s administration of the OFA.
This was clearly not the intention of the DBFO Act, which sought to make the new OFA regime more streamlined and flexible; however, unless rectified by ASIC, this issue promises to do nothing but the opposite.
If you have any questions in relation to the above or the new OFA regime generally, please get in touch with Cowell Clarke’s Financial Services Team at Compliance@CowellClarke.com.au.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.