Navigating ongoing fee arrangements: Key changes and considerations for advisers

The minister will have powers to approve, and mandate, the use of a standardised consent form for ongoing fee arrangements following industry feedback.

Following the release of the first tranche of draft legislation for the Delivering Better Financial Outcomes package of reforms last year, the industry called on the government to mandate a fee consent form to ensure product issuers are required to accept it.

Back in December, the Financial Advice Association Australia (FAAA) said the way forward is to either remove the requirement for product issuers to verify client consent for every account or require product issuers to accept the standard form as evidence of client consent.

The FAAA chief executive officer, Sarah Abood, said the FAAA’s preferred method would be the first of these options.

“We now believe that the only sensible way to move forward is to remove the requirement for the fee consent form to be provided to product providers and allowing them instead to operate a sample-based audit regime,” she said.

However, the legislation tabled in Parliament on Wednesday includes powers for the minister to approve, and mandate, the use of a standardised consent form for ongoing fee arrangements.

“This is in response to the feedback from industry that a mandatory form is required if the efficiency benefits of a standard consent form are to be realised,” the explanatory draft accompanying the legislation read.

The explanatory memorandum, however, clarified that it may not necessarily be one form. Namely, the minister may approve “one or more forms” for giving consent to enter into or renew an ongoing fee arrangement or authorise the deduction of ongoing fees.

“The ability to approve multiple forms and the requirement that the approved form be in relation to the circumstances specified is intended to give the minister appropriate flexibility in determining consent forms to respond to evolving practices in the industry and the regulatory context,” the memorandum stated.

There is also no requirement for the minister to “approve a form or a form for all circumstances”.

“However, where the minister approves a form, that form becomes mandatory for collecting a consent,” it said.

“If the minister approves a mandatory form, it will help to standardise information collection requirements and reduce administrative burdens on industry and provide certainty that a consent satisfies regulatory requirements.”

Fixed anniversary date scrapped

Responding to adviser concerns, the explanatory memorandum clarified that the requirement to provide a fee disclosure statement has been removed to "reduce the cost of advice for clients".

"However, the repeal of this requirement applies in a modified way for ongoing fee arrangements that are on foot when these amendments apply, 6 months after commencement," it said.

The original draft had suggested the use of a fixed anniversary date for fee consent, to which the FAAA objected, noting at the time that it “prevents advisers from bringing forward the renewal process, and not allowing advisers to sensibly rationalise the key dates for client groups”.

The government appears to have listened to these objectives as in the final legislation it offers more flexibility so that there is an “extended window of time around the annual date in which consent can be renewed to ongoing fee arrangements and deduction arrangements”.

It also gives clients and advisers the ability to agree to an earlier renewal date at the time a consent is first signed or renewed. But the legislation specifies that a new consent given in relation to an ongoing fee arrangement must be put in place before an existing consent ceases to have effect.

The explanatory memorandum added: "These amendments have effect such that, each year, a new consent that complies with the requirements of section 962G must be put in place in the period that starts 60 days before and ends 150 days after:

• a day specified in the consent currently on foot; or
• if no such day is specified, the anniversary of:
  ‒ the most recent day specified for this purpose in a consent; or
  ‒ if no such day has ever been specified, the day on which the arrangement was entered into.

"If this does not happen, the consent on foot ceases to have effect at the end of the above period, at which point the arrangement terminates."

The memorandum provides an example of how this would work in practice:

Tara is the fee recipient for an ongoing fee arrangement with a client, Javier. This arrangement was entered into on 11 August 2025. In the first consent form Javier signed, no date was specified as the reference date for the purposes of paragraph 962H(2)(a).

Assuming the arrangement does not otherwise terminate, the period during which a new consent must be put in place is based on the anniversary of the day on which the arrangement is entered into, namely 11 August 2026. The earliest date Tara and Javier can put in place a new, compliant consent is 60 days before that date (12 June 2026). The new consent must also be put in place no later than 150 days after that date (8 January 2027). If Javier does not renew his consent during this window, his consent will cease to have effect and their arrangement will terminate.

When putting this new consent in place, Tara and Javier decide it would be more convenient for the renewal schedule to align with financial years, since Javier often comes in to see Tara shortly after the start of each new financial year anyway. They therefore decide to specify a new date of 1 July 2027 in this consent. This new date will be effective, as it is earlier than the date that would otherwise be the next reference date (11 August 2027).

Next year, Tara and Javier will be able to put in place a new consent from 2 May 2027 (being 60 days before 1 July 2027). A new consent must then be put in place before 28 November 2027 (being 150 days after 1 July 2027) or their arrangement will terminate. This same schedule will also continue for each subsequent year unless and until Tara and Javier decide to change it.

New form required with every change

The explanatory memorandum also explained that not only is a new consent form required every year, but a change to the services to be provided could require new consent.

“A change to the services to be provided would require a variation of the consent or new consent.

“A change to the name or contact details of the fee recipient (for example, if the fee recipient or client changes their surname by marriage) would not trigger the need to vary or seek new consent – though best practice would be to notify the client of such an update, as a courtesy. The annual renewal process for consent provides an opportunity to revise such details.

“This approach balances the objective of informed client consent with the aim to streamline administration of ongoing fee arrangements.

According to the explanatory memorandum, the Corporations Regulations would also be able to “prescribe additional information to be disclosed, to supplement the core requirements set in the Corporations Act”.

This, it said, is to allow the government to deal with the “diversity and complexity of the financial services industry” and its evolving practices.

“This will ensure the regulatory framework is kept up to date while providing commercial certainty quickly and efficiently to industry participants,” it said.

An earlier version of this article incorrectly stated that fee disclosure statements were not removed.