In view of the complexities of the FOFA reforms, and their breadth and scope, AFS licensees and their representatives will need to take steps to ensure that:

  • Where the AFS licensee or its authorised representatives provide personal advice to retail clients:
  • policies/procedures and client documents (fact finders; SoAs etc¡K) are amended to demonstrate compliance with the best interests duty and enable reliance on the "safe harbour";
    • APLs are reviewed and policies regarding use of APLs and selection of investments for retail clients are amended;
    • grandfathered clients have been identified;
    • an assessment of whether an ASIC exemption from the "opt-in" obligations is required, has been undertaken; and
    • the form, content and timing requirements of the fee disclosure statements required to be sent to clients annually, have been met.
  • The AFS licensee has determined whether it is a "platform operator" for FOFA purposes, and whether it acts in that capacity with regard to the acquisition of financial products by retail clients.
  • It is satisfied that other licensees with whom it has an "arrangement", have been appropriately classified as either a "platform operator" or a non-"platform operator".
  • The AFS licensee has reviewed all existing and proposed payment arrangements in which it participates with other licensees or their authorised representatives, to determine which of those would constitute an "arrangement" for FOFA purposes.
  • The AFS licensee has documented written guidelines on the meaning of "arrangement" and the scope of grandfathering for the purposes of the bans on conflicted remuneration and volume-based shelf-space fees, and on when a "new" arrangement arises.
  • The AFS licensee has procedures in place to ensure that any changes to existing arrangements, or the entry into new arrangements, are assessed against those guidelines from a legal and commercial perspective to determine whether they give rise to adverse FOFA impacts (for example, loss of grandfathering).
  • The AFS licensee has documented written guidelines on the meaning and scope of the application of the "anti-avoidance" regime.
  • The AFS licensee has procedures in place to ensure that any changes to existing arrangements, the entry into new arrangements, or other business decisions, which have the outcome of avoiding the application of any FOFA provision, are assessed against the anti-avoidance guidelines.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.