Published on Jun 01, 2021

1 July will usher in new rules for fee consent and disclosure of lack of independence 1 July will usher in new rules for fee consent and disclosure of lack of independence

Courtesy of the latest round of Royal Commission legislation, from 1 July 2021 financial advice firms need to update their Financial Services Guides (FSGs), Ongoing Service Agreements and Financial Disclosure Statements (FDSs).

The key changes are:

  • FSGs must include written disclosure that you are not “independent, impartial or unbiased” (assuming you are not independent within the meaning of section 923A of the Corporations Act);
  • FDSs must include forward-looking disclosure as well as the current backward-looking disclosure; and
  • All Ongoing Fee Arrangements must be renewed by the client each year (including pre-1 July 2013 arrangements).

There is effectively no transition period for the new FSG rules – you must include the “Not Independent” disclosure in your FSG from 1 July. The new FDS rules also commence on 1 July, but there is a 12-month transition period.


What are the new requirements?

Under the new rules, the Fee Recipient in respect of an Ongoing Fee Arrangement must give the client a FDS each year within 60 days of the client’s “Anniversary Day” – a new term which replaces both “Disclosure Day” and “Renewal Notice Day”.

A client’s Anniversary Day will be:

  • For existing clients, the date that you first provide the client with a FDS after 1 July 2021; or
  • For new clients, the date that you enter into an Ongoing Fee Arrangement with the client.

The FDS must include:

  • Information about the services received and fees paid over the previous 12 months (as per the current requirements);
  • Information about services and fees for the next 12 months; and
  • A statement that if the client does not renew the Ongoing Fee Arrangement within 120 days of the Anniversary Day, the arrangement will terminate.


The new rules also require that:

  • A Fee Recipient must not deduct or receive Ongoing Fees without the client’s consent; and
  • The client’s consent automatically expires 150 days after the client’s next Anniversary Day.

The Fee Recipient must obtain a new fee consent before the old one expires, or the Ongoing Fee Arrangement will terminate.

You are free to obtain the client’s consent separately, but we think it makes sense to do it at the same time as you renew the Ongoing Fee Arrangement (via the FDS) to avoid unnecessary duplication.

If you wish to obtain the client’s consent via the FDS, it must include certain prescribed information including: an explanation of why consent is being sought, frequency and amount of the fee, which account the fee will be deducted from and how the client can vary or withdraw their consent.

For joint accounts, you must obtain the consent of each account holder.


The client can terminate an Ongoing Fee Arrangement at any time, effective immediately. Otherwise, it will automatically terminate 150 days after the client’s Anniversary Day if the Fee Recipient:

  • Fails to give the client a FDS within 60 days of the Anniversary Day; or
  • Fails to obtain the client’s consent to renew the Ongoing Fee Arrangement within 120 days of the Anniversary Day.

If an Ongoing Fee Arrangement terminates for any reason, the Fee Recipient must notify both the client and the product provider (if any) through which the Ongoing Fee is paid within 10 business days of termination. Failure to do so is a civil penalty provision.

What about Renewal Notices?

Renewal Notices are going the way of the Dodo. They will be repealed as at 1 July 2021 and clients will renew their Ongoing Fee Arrangements via the FDS.

What about pre-1 July 2013 arrangements?

The honeymoon is over. The new rules will apply to all Ongoing Fee Arrangements, including pre-1 July 2013 arrangements.


What are the new requirements?

Under the new rules, any adviser or advice firm that issues an FSG must disclose their lack of independence on the front page of the FSG.

What do you mean by ‘independent’?

Section 923A of the Corporations Act restricts the use of the words “independent”, “impartial” and “unbiased”. Only advisers/firms that satisfy a list of strict criteria are free to use those words. Everyone else is categorised as “Not Independent” and subject to the new FSG disclosure obligations.

Am I independent?

Probably not. Only about 2% of advisers/firms are independent within the meaning of section 923A.

However, you may qualify if you, your AFS licensee and all authorised representatives:

  • Do not receive insurance commissions (or rebate them back to clients in full);
  • Do not receive any gifts or benefits from product providers;
  • Have no restrictions regarding the products you can recommend; and
  • Do not own, are not owned by, and do not have any interest or association with any product providers.

It’s important to get this right – get in touch if you are unsure.

What is the “Not Independent” disclosure?

If you don’t qualify as independent, you must specifically disclose that you are not independent, impartial or unbiased and explain why. There are also requirements about how this disclosure must be displayed in the FSG.

In terms of explaining why you are not independent, impartial or unbiased, ASIC has chosen not to issue any prescribed wording as it considers that advice firms are best placed to describe their business model to their clients. This means there is flexibility to develop a statement that reflects your firm’s circumstances and will be easily understood by your clients.

I’m not ready for this – where do I start?

Don’t worry, we’ve got you covered. To help you prepare for the changes, we’ve updated our Financial Services Guide Template, MDA Provider Financial Services Guide and Ongoing Service Toolkit to comply with the enhanced disclosure obligations. These templates include the prescribed content as well as helpful tips and guidance. They are a simple way to satisfy the new rules and can be tailored to suit your business and fee structure.

If you need help interpreting the new rules or updating your documentation, get in touch. We’d be happy to help.

Simon Carrodus, Corbin Jennings

June 2021

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