Document ID: chunk:federal_register_of_legislation:F2024L00375:body:0:p11
Version: federal_register_of_legislation:F2024L00375
Segment Type: other
Provision Reference: 
Character Range: 26065–28885

that the sub-custodian will fail to meet its obligations; and
(b) keep the written record of reasons for 7 years after the security interest, mortgage, lien or encumbrance has ceased.
              (5) A financial services licensee that complies with this section in relation to an arrangement with a sub-custodian is taken to comply with any condition on its Australian financial services licence concerning the arrangement.
           912AAE Agreements with retail clients for custodial or depository services
A financial services licensee that that enters into or varies an arrangement to provide a custodial or depository service to a person as a retail client in relation to custodial property must have a written agreement with the person that contains provisions:
(a) for the licensee to acknowledge to the retail client on request the manner in which it holds the custodial property; and
(b) specifying how instructions are to be given to the licensee; and
(c) to the effect that the licensee is liable to the client if there is a loss to the client due to a failure by the licensee, or a person it directly or indirectly engages to:
                     (i) hold the custodial property; or
                     (ii) comply with the duties under the agreement or other agreement relating to holding the custodial property; or
                     (iii) observe reasonable standards generally applied by providers of custodial or depository services for holding the property held;
subject to any provision for the licensee to limit its liability resulting from failure of a person it has directly or indirectly engaged if that person is insolvent and the licensee has not failed to take reasonable care in engaging and monitoring compliance by that person; and
(d) to the effect that the licensee is prohibited from taking or granting a charge, mortgage, lien or other encumbrance over, or in relation to, the assets held under the arrangement unless it is:
(i) for expenses and outlays made within the terms of the agreement other than any unpaid fees of the licensee; or
(ii) in accordance with the client's written instructions; and
(e) specifying how records of the assets held, the transactions and how, by whom and when they were authorised will be kept and maintained by the licensee and made available to the client; and
(f) to that effect that the licensee will apply verification procedures for the appropriately frequent reconciliation and checking of the property; and
(g) requiring reporting by the licensee to the client; and
(h) to the effect that where practicable before arranging for the custodial property to be held by another person and in any event before the assets are held by the other person, except in exceptional circumstances identified in the agreement, the licensee will provide the