Rights relating to portfolio assets condRights relating to portfolio assets conditions

Rights relating to portfolio assets conditions

(20) If a MDA contract between the licensee and a person as a retail client includes provisions that require the licensee to consider exercising, or to exercise, a right that relates to client portfolio assets, the licensee must fulfil those duties as provided in the MDA contract.

(21) If a MDA contract between the licensee and a person as a retail client does not include provisions that require the licensee to consider exercising, or to exercise, a right that relates to client portfolio assets, the licensee must:

(a) give to the client, as soon as practicable after receipt, a copy of all the communications sent to the licensee that are relevant to the exercise of the right; and

(b) take reasonable steps to implement any instructions given by the client about how the right relating to the assets is to be exercised.

Investment in unregistered schemes and non-limited recourse products

(22) The licensee must ensure that the client portfolio assets of a person who entered in a MDA contract do not include:

(a) interests in a managed investment scheme that is not a registered scheme or a notified foreign passport fund; or

(b) interests in a scheme that is not a managed investment scheme because of paragraph (e) of the definition of managed investment scheme in section 9 of the Act; or

(c) a non-limited recourse product.

(23) Paragraph (22)(c) does not apply if:

(a) both the following are satisfied:

(i) the client has previously given written consent separate to the MDA contract to invest the client portfolio assets in the non-limited recourse product;

(ii) when consent was given, the client was given a statement in writing about the non-limited recourse product that included the information required by subsection (24) and the client acknowledges the statement in the consent; or

(b) consent and a written statement that comply with paragraph (a) for a non-limited recourse product of the same type has previously been given by the client and the investment program contained in the MDA contract for the client has not changed or has not fallen due for a review as required under subsection 912AEB(8).

(24) The following information is required for the purposes of subparagraph (23)(a)(ii):

(a) information about the key features of the product (including any significant risks associated with acquiring the product) that may be material to the decision of a person as a retail client whether to do so;

(b) information about the degree of leverage that may apply in relation to the product, including:

(i) if the maximum potential liability of a person holding the product is unlimited—a statement to that effect; and