912AEAFinancial Services Guide

912AEA Financial Services Guide

(1) A licensee must, before entering into a MDA contract to provide MDA services to a person as a retail client, give the person a Financial Services Guide that complies with Division 2 of Part 7.7 and, subject to subsection (3), includes the following statements and information: (a) information about the operation of any outsourcing arrangements that apply to the licensee in relation to the MDA services, including: (i) a brief description of the procedures the licensee has in place to ensure that due skill and care is taken in choosing suitable service providers; and (ii) the functions of the licensee that are outsourced; and (iii) the entities that will be performing the outsourced functions; and (iv) a brief description of the procedures the licensee will use to monitor the performance of the providers of the outsourced functions; (b) a statement that the person must first enter into a MDA contract before MDA services are provided to the person; (c) if the investment program that will be included in the MDA contract is to be one prepared by the licensee, statements that the investment program complies with Division 3 of Part 7.7 and Division 2 of Part 7.7A and will contain: (i) a statement about the nature and scope of the discretions the licensee will be authorised to, and those that the licensee is required to, exercise under the MDA contract and the investment strategy that is to be applied in exercising those discretions; and (ii) information about any significant risks associated with the MDA contract; and (iii) the basis on which the licensee considers that MDA contract to be suitable for the client; and (iv) the warnings that paragraph 912AEB(5)(c) requires; (d) a statement of who will be responsible for reviewing the investment program; (e) if the investment program that will be included in the MDA contract is to be prepared by an external MDA adviser: (i) a statement of the name and contact details of the external MDA adviser; and (ii) the statements and information in subparagraphs (c)(i) and (ii), to the extent that those statements or information are not included in the investment program; and (iii) a statement to the effect that the investment program will contain: (A) the basis on which the external MDA adviser considered the MDA contract to be suitable for the client; and (B) the warnings that paragraph 912AEB(5)(c) requires; (f) information about any significant risks associated with investing through the MDA service; (g) a statement whether and, if so, information as to how, the client may give instruction to the licensee on how rights relating to financial products in the client portfolio assets are to be exercised; (h) if an external MDA custodian or a person acting on behalf of an external MDA custodian holds the legal title to any of the client portfolio assets: (i) a statement to the effect that the licensee does not provide custodial or depository services relating to the MDA services for those client portfolio assets; and (ii) a statement of the name and contact details of the external MDA custodian who is responsible for the custodial or depository services in relation to those client portfolio assets; and (iii) statements of the services for which the external MDA custodian is responsible and those for which the licensee is responsible; (i) if the client will hold the client portfolio assets, a statement to the effect that the MDA service does not include custodial or depository services; (j) if the client portfolio assets may include non-limited recourse products, the following information: (i) the types of non-limited recourse products that may be included in the client portfolio assets; (ii) information about the key features of those types of products (including any significant risks associated with investing in those types of products) that may be material to the decision of a person as a retail client whether to acquire those types of products; (iii) information about the degree of leverage that may apply in relation to each type of product and in relation to the client portfolio assets of the client as a whole, including: (A) if the maximum potential liability of a person holding a type of product is unlimited—a statement to that effect; and (B) otherwise—the maximum value of the ratio between the maximum potential liability of a person holding that type of product and the amount payable by the person to acquire that type of product; (iv) a clear and prominent example illustrating in dollars the risk of the potential liability of a person who holds each type of product; (v) information about the policy of the licensee for communicating and satisfying margin calls or requirements to provide collateral or make payments in relation to each type of product; (vii) information about the policy of the licensee for closing positions at a loss in relation to each type of product; (k) any other information that a person would reasonably require for the purpose of making a decision, as a retail client, about whether to invest through the MDA service. (2) The Financial Services Guide must also contain information about fees and costs in relation to the MDA services that complies with Part 2 of Schedule 10 of the Corporations Regulations 2001 as if: (a) a financial product that is either of the following were a managed investment product: (i) an interest in a managed investment scheme that is limited to the MDA services; (ii) a miscellaneous financial investment product that is limited to the MDA services; and (b) the Financial Service Guide were a Product Disclosure Statement for such a managed investment product; and (c) the licensee were the responsible person (as defined in subsection 1013A(3)) for such a managed investment product.