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March 23, 2012

FOFA Bills passed by lower house

The Corporations Amendment (Future of Financial Advice) Bill 2011 and the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 have been passed by the House of Representatives after the Government amended the ‘opt-in’ provision of the first bill by exempting financial advisers bound by an ASIC approved code of conduct which "obviates the need for persons bound by the code to be bound by the opt-in requirement".

The opt-in measure requires a financial adviser or planner who charges on-going fees to send a renewal (‘opt-in’) notice every two years to clients.

If the client does not renew the adviser’s services by ‘opting in’ to the renewal notice, they are assumed to have opted out and an ongoing advice fee can no longer be charged. The client is also entitled to recoup any ongoing fees that are charged in the event that the adviser fails to send either a fee disclosure or renewal notice. Only those advisers intending to charge ongoing advice fees to retail clients need to provide the notices.

Other amendments were made earlier this week (see here) but other suggested refinements and deferral of mandatory compliance to 1 July 2013 are yet to be tabled.

The Bills will now be considered by the Senate.

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Posted 23rd March 2012 by admin in Corporations Act, Financial Services, Future of Financial Advice Reforms