Ongoing Fee Arrangements continue to be one of the most frequently misunderstood areas of advice compliance. Despite reforms introduced under the Delivering Better Financial Outcomes package, audits and file reviews consistently reveal confusion around consent timing, bank‑account payments, and the consequences of allowing consent to lapse. These misunderstandings often arise because advisers unintentionally blur two separate legal regimes that apply to ongoing advice fees.
The first is the Ongoing Fee Arrangement regime itself. The second relates to consent requirements when fees are deducted from an account. While these regimes are connected, they operate independently and must be considered separately when structuring and administering ongoing advice fees.
An ongoing fee arrangement exists whenever a retail client receives personal advice and is required to pay fees for more than twelve months. Crucially, the method by which those fees are paid does not affect whether an OFA exists. Whether fees are deducted from an investment platform, a cash management trust, or paid from a bank account, the arrangement is still an OFA, and the full consent framework applies. There is no bank‑account exception to the OFA rules.
Once an OFA is in place, advisers must obtain written client consent annually. This consent is tied to an agreed Reference Date, which determines the renewal cycle. Consent may be obtained up to sixty days before the Reference Date, or within one hundred and fifty days after it. If valid consent is not obtained within that renewal window, the arrangement automatically terminates by operation of law.
Where confusion often arises is regarding fee deduction consent under section 962T of the Corporations Act. This provision applies only where an adviser or licensee deducts, arranges to deduct, or accepts the deduction of fees from an account. In practice, this includes fees deducted from platforms, superannuation accounts, cash management trusts, and adviser‑initiated bank account direct debits.
However, section 962T does not apply where the client controls the payment process and pays the adviser directly. Examples include client‑initiated EFT transfers, BPAY payments, manually paid invoices, and standing instructions established by the client with their bank. In these situations, no section 962T fee‑deduction consent is required, but the OFA consent requirement still applies in full.
A useful way to distinguish between these obligations is to consider who controls the payment. If the adviser can pull the money, section 962T applies. If the client pushes the money, it does not. Either way, the OFA rules continue to apply.
Advisers must also carefully manage fee charging where consent has lapsed. Ongoing advice fees must not be charged or deducted after the end of the twelve‑month service period unless valid written consent is in place. If consent is not obtained by the Reference Date, fee charging must stop immediately. Where consent is later obtained within the one‑hundred‑and‑fifty‑day post‑reference window, fees may recommence from the date consent is received, but cannot be charged retrospectively.
It is also important to understand that the legislation regulates fees and consent, not service delivery. Whether advice services continue during the post‑reference window is a licensee or practice risk decision, rather than a legislative requirement. Advisers must follow their licensee’s policy where consent has lapsed.
If valid consent is not obtained within one hundred and fifty days after the Reference Date, the OFA automatically terminates. At that point, no further ongoing advice services or fees may be provided under the arrangement, and a new OFA would be required to recommence ongoing services.
Effective OFA management relies on disciplined consent processes, accurate record‑keeping, clear client communication, and strict adherence to licensee policy. Getting these fundamentals right remains one of the most effective ways to reduce regulatory risk.
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