How time has flown! We’re 6 months in to the revised MDA services framework, but what with Christmas and all, we’ve not seen much evidence of MDA providers changing their processes.
But the first deadline - for full service MDA providers - is approaching, people. It’s time to get your skates on!
Here’s the first of 4 blogs – this one looks at what full service MDA providers and financial advisers who recommend those MDA services need to do before 1 October 2017. You might like to start by refreshing your memory about the changes, which we explained in Changes to MDA Regulation.
NB: MDA providers who operate through a regulated platform have another 18 months before they need to operate in line with the changed requirements. But because you need to apply for a licence variation and it can take up to 9 months for variations to be processed by ASIC, you’d be well advised to start soon.
Licensed MDA Providers
|Area||Before 1 Oct 2017|
|FSG||Incorporate the following additional information: Name and contact details of your external MDA adviser; Fees and costs (in similar format
to a PDS)
|Investment Program||Add enough information about the investment strategy to enable a reasonable retail client to decide if it is suitable for them.|
Incorporate the following additional material:
|Non-limited recourse products||Obtain written client consent (which includes specific disclosures about the products and their risks) to invest in non-limited recourse products such as contracts for difference and leveraged OTC derivatives, if you use them.|
|SoA Review||Implement procedures for reviewing SoAs that recommend your MDA services before entering into an MDA contract with the client.|
|Conflicts of interest||Identify conflicts of interest arising from your MDA services and document your policies and procedures for dealing with them.|
|Asset holding||Implement procedures for selecting and monitoring your custodian.|
|Outsource administration||Implement procedures for selecting and monitoring your administration provider.|
|Termination procedures||Implement procedures to ensure the orderly termination of MDA contracts.|
|Area||Before 1 Oct 2017|
|FSG||As your FSG does not need to include information about MDA services if you are not also an MDA provider, you may wish to revise it.|
|SoA||Implement procedures to provide your initial SoA recommending the MDA service to the MDA provider, who needs to satisfy themselves that there is no reason to believe that the service is not appropriate for the client. Yes really!|
|Fee disclosure statement||Check that your Fee Disclosure Statement correctly discloses the MDA advice fees. NB: If the investment management service is a centralised function which doesn’t provide personal advice to individual clients and charges a separate fee to your financial advice fees, you don’t need to include the investment management fee in your FDS.|
Help from The Fold
The Fold’s template FSG material, MDA Advice and Contract Documentmaterial now incorporate all the new requirements. We’ve also prepared comprehensive policies and procedures for both MDA providers and MDA advisers.
Buy the whole MDA Kit and receive a % discount.
Contact us for advice about how the requirements apply to your MDA service, or for help in customising the templates for your business. We’d be delighted to help.
Author: Claire Wivell Plater