Lesson 3 - Fixed Term Fee Agreements

This lesson sets out the Licensee’s standard for entering into and maintaining Fixed Term Fee Arrangements (FTA)

It applies to non-ongoing fee arrangements:

• entered into on or after 10 January 2025 (start day), and

• already in force on the start day, from the first anniversary of the arrangement that occurs after the start day.

What Is A Non-Ongoing Fee Arrangement?

Non-ongoing advice fee arrangements are not defined in the Act, but refer to any fee arrangement that relates to a fee arrangement for a period of up to 12 months.

The Fee Recipient

The entity that enters into the OFA with the client (the practice) is referred to as the ‘Fee Recipient’

The Fixed Term Fee Agreement (FTA)

There are 2 key documents that are included in a Fixed Term Fee Arrangement:

1. The Fixed Term Fee Arrangement (FTA).

2. The Fee Deduction Consent Form (Consent).

These 2 documents can be prepared and presented together. Generally, they will be generated as part of your Statement of Advice.

Important:

Both forms must be provided to the client. An FTA alone does not constitute Fixed Term Fee Arrangement. A compliant fixed term fee agreement must include an executed Fee Deduction Consent Form.

What must be included in the Fixed Term Fee Agreement (FTA)?

Before a client enters into an FTA, or before a fee recipient deducts, arranges to deduct, or accepts payment of fees from a client’s account, the fee recipient must disclose to the client, in writing:

• the name and contact details of the person who is the fee recipient under the arrangement

• an explanation of why the fee recipient is seeking the consent

• the period before the consent ceases to have effect

• information about the services that the client will be entitled to receive under the arrangement during the period

• for each fee that the client will be required to pay under the arrangement during the upcoming period either:

• the amount of the fee, or

• if the amount of the fee cannot be determined at the time of disclosure, a reasonable estimate of the amount of the fee and an explanation of the method used to work out the estimate

• the frequency of the fees during the upcoming period

• a statement that the ee arrangement can be terminated by the client at any time

• a statement that the arrangement will terminate, and no further advice will be provided or fee charged under it, if the consent is not given

Preparing an FTA Document

The Fee Recipient must ensures that it uses the Licensee FTA Document Template.

• If you are using Xplan or iC2, the FTA will be generated with your SOA.

• If you are using a different CRM, you can access the FTA template from the Compliance Hub.

Fees Deducted via a Platform

Where a fee is to be deducted from a platform, the platforms Fee Deduction Consent Form must be completed, in addition to the licensee Fee Deduction Consent Form.

Important:

The platforms Fee Deduction Consent Form does not alleviate the obligation to provide your client with the licensee Fee Deduction Consent Form.

Electronic Signature

The FTA and Consent Form may be provided in hard copy or electronically.

It may also be signed in wet ink or electronically.

Examples of electronic signature are:

• clicking a check box on a webpage in response to a statement such as: ‘By ticking the box, you consent to the fee arrangement and to the charging of the fees that are set out in this document’; or

• sending written consent via email with an electronic signature attached.