Time To Set Your Records Straight!

by | May 24, 2021 | AFSL | 0 comments

Prepared by Lisa Sculley

New record keeping requirements and OFA’s 

What it involves 

By now, most of you will be aware that after 1 July 2021 OFA’s will need to be renewed by clients annually. Clients will need to be furnished with a new enhanced FDS, which not only provides details of the previous year’s fees and services, but also sets out the fees and services for the upcoming 12 months.  

Just to keep you on your toes, you will also now need comply with new legislation which relates to OFA’s and record keeping. From 1 July 2021, fee recipients will be required to keep records relating to each FDS given to clients and the date and manner in which it was given. If a client provides a notification of an election to renew (or not renew) or to terminate the OFA, you will need to retain a record of both, the notification and, the date on which it was given. Furthermore, if the OFA has been terminated, you must keep records of the date and the basis on which the OFA was terminated. 

OFA’s and account holder deductions: 

In relation to OFA’s and account holder deductions, fee recipients will also have to retain records in relation to the following: 

  • Each consent for deductions given to the fee recipient and the date on which consent was given; 
  • Each notice (and the date on which it was given) from an account holder if consent is withdrawn or varied; and  
  • Each confirmation of receipt of such notice given by the fee recipient. 

Communications 

Fee recipients must also keep a copy of communications and the date on which it occurred for each consent for deductions relating to the OFA.  This means that you need to retain records evidencing any communication between you and your client and the date on which it occurred in circumstances where you are required to give a copy of the consent, a copy of a notice withdrawing or varying the consent or give written notice of the cessation of the consent in accordance with the Corporations Act. 

Finally, it is worth noting that if a fee recipient arranges with another person (the account provider) for deductions relating to the OFA to be made in accordance with the Corporations Act, records of the details of the arrangement with the account provider must be retained. 

Consequences of not keeping adequate records 

Records must be kept for a minimum period of 5 years after the day that the entry was made. A failure to comply with these obligations can result in 1 year imprisonment and/or a fine of $26,640 for an individual, which is a very significant incentive to make sure records are up to date!